Is AVGO a good stock to buy? We came across a bullish thesis on Broadcom Inc. on Investomine’s Substack. In this article, we will summarize the bulls’ thesis on AVGO. Broadcom Inc.’s share was trading at $345.75 as of March 9th. AVGO’s trailing and forward P/E were 67.40 and 32.36 respectively according to Yahoo Finance.
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Broadcom Inc. designs, develops, and supplies various semiconductor devices and infrastructure software solutions internationally. AVGO closed fiscal year 2025 with a record-breaking performance, driven primarily by the explosive growth in AI semiconductor demand. Revenue surged 24% to $63.9 billion, while GAAP net income jumped 292% to $23.1 billion, though this figure was inflated by unusual tax benefits and non-GAAP adjustments.
Adjusted EBITDA margins reached a best-in-class 68%, and free cash flow totaled $26.9 billion, highlighting the company’s exceptional cash-generating ability. The semiconductor segment, led by custom AI accelerators and Ethernet AI switches, now dominates growth, with hyperscale customers fueling a super-cycle that mirrors trends that propelled Nvidia. Broadcom’s infrastructure software business, including VMware integration, continues to scale, providing steady revenue growth of 19% year-over-year, though it remains overshadowed by semiconductor momentum.
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Despite these strengths, investors should be cautious. Broadcom carries a heavy debt load of $62 billion, and while cash reserves rose to $16.2 billion, leverage remains significant. The company’s earnings are also clouded by substantial non-GAAP adjustments, including $8.1 billion in intangible amortization and $7.6 billion in stock-based compensation, which obscure true profitability. Revenue concentration in AI accelerators exposes Broadcom to cyclical risks tied to a small set of hyperscaler clients, and any slowdown in AI spending could materially impact results.
Nevertheless, Broadcom represents a compelling long-term compounder in AI infrastructure, offering strong free cash flow, a durable moat in custom silicon, expanding software capabilities, and consistent dividend growth. With the AI super-cycle still early and management bullish on 2026, the company provides attractive upside potential for investors willing to navigate concentrated client exposure, high leverage, and earnings volatility, making it a bullish yet risk-aware investment opportunity.
Previously, we covered a bullish thesis on Broadcom Inc. (AVGO) by Daan Rijnberk in March 2025, which highlighted AI-driven semiconductor growth, record margins, VMware integration, and strong free cash flow. AVGO’s stock price has appreciated by approximately 76.81% since our coverage. Investomine shares a similar view but emphasizes full-year 2025 results, GAAP net income surge, and leverage and non-GAAP adjustments.
Broadcom Inc. is on our list of the 40 Most Popular Stocks Among Hedge Funds. As per our database, 202 hedge fund portfolios held AVGO at the end of the fourth quarter which was 183 in the previous quarter. While we acknowledge the risk and potential of AVGO as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than AVGO and that has 10,000% upside potential, check out our report about this cheapest AI stock.
Disclosure: None.
