Broadcom Inc. (AVGO): A Bull Case Theory

 We came across a bullish thesis on Broadcom Inc. on TechIt_alt’s Substack. In this article, we will summarize the bulls’ thesis on AVGO. Broadcom Inc.’s share was trading at $344.13 as of Ocotber 14th. AVGO’s trailing and forward P/E were 86.71 and 36.76 respectively according to Yahoo Finance.

Broadcom operates quietly behind the scenes, yet it is central to the global AI infrastructure powering deals from OpenAI to hyperscalers. Its business combines custom semiconductors (ASICs and XPUs), networking solutions, and enterprise software through VMware, creating a rare mix of growth, stability, and recurring cash flow with unmatched AI exposure.

In Q3 FY25, Broadcom reported AI semiconductor revenue of $5.2 billion, up 63% year-over-year, marking its tenth consecutive quarter of growth, with Q4 projected to rise 66% to around $6.2 billion. This growth is driven by a structural, multi-year shift toward custom accelerators for large-scale model training, not short-term trends.

The company’s backlog reached a record $110 billion, effectively locking in revenue for the next two fiscal years. Broadcom continues to generate sector-leading adjusted EBITDA of $10.7 billion and $7 billion in free cash flow per quarter, surpassing what most semiconductor firms produce annually. A pivotal catalyst is the $10 billion XPU order, reportedly from OpenAI, which adds a fourth major AI customer and underscores Broadcom’s strategic role in custom AI silicon. This engagement highlights OpenAI’s diversification away from GPU dependency and positions Broadcom to co-engineer next-generation chips alongside leading AI players.

The combination of accelerating AI demand, structural growth in custom semiconductors, record backlog, and high-margin cash flow makes Broadcom a uniquely compelling investment, offering both upside from AI infrastructure expansion and a resilient earnings profile. For investors, this is not merely a quarterly beat but a long-term opportunity to capitalize on the central engine quietly powering the future of AI computing.

Previously we covered a bullish thesis on Broadcom Inc. (AVGO) by Daan Rijnberk in March 2025, which highlighted the company’s AI-driven revenue growth, strong free cash flow, VMware integration, and deep hyperscaler relationships. The company’s stock price has appreciated approximately by 75.98% since our coverage. This is because Broadcom continued to capitalize on AI demand while maintaining high margins. The thesis still stands as Broadcom remains central to AI infrastructure. TechIt_alt shares a similar bullish view but emphasizes the $10 billion XPU deal and structural shift toward custom AI silicon as key catalysts.

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Disclosure: None.