Is AVGO a good stock to buy? We came across a bullish thesis on Broadcom Inc. on Nikhs’s Substack. In this article, we will summarize the bulls’ thesis on AVGO. Broadcom Inc.’s share was trading at $396.72 as of April 15th. AVGO’s trailing and forward P/E were 77.33 and 35.59 respectively according to Yahoo Finance.
Broadcom Inc. designs, develops, and supplies various semiconductor devices and infrastructure software solutions internationally. AVGO emerges as a structurally re-rated infrastructure leader rather than a cyclical semiconductor name, with its 1QFY26 results reinforcing a rapidly compounding AI franchise. The company reported $19.31 billion in revenue, ahead of expectations, while AI chip sales doubled year-over-year to $8.4 billion, and guided 2Q revenue to approximately $22 billion, meaningfully above consensus.
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More importantly, management disclosed line of sight to over $100 billion in AI chip revenue by fiscal 2027, a statement grounded not in aspiration but in binding deployments, contracted demand, and a supply chain already secured through 2028. This visibility is underpinned by approximately 10 gigawatts of hyperscaler AI buildouts across customers including OpenAI, Anthropic, Google, Meta, and others, translating into a mathematically supported revenue ramp rather than narrative-driven forecasts.
Broadcom’s competitive moat strengthens as hyperscalers increasingly pursue insourced silicon, since the company industrializes custom XPU programs at scale, solving the hardest problems in packaging, yield, SerDes, and system-level integration. Rather than disintermediating Broadcom, insourcing deepens dependency on its execution capabilities.
At the same time, AI networking is emerging as an underappreciated growth engine, contributing roughly $2.8 billion in Q1 and trending toward $4.3 billion in Q2, with Ethernet-based scale-up architectures expanding its role inside AI clusters. This positions Broadcom’s networking business, including Tomahawk, as a potential standalone hyperscale peer to Arista Networks but at significantly larger scale and faster growth.
The company’s software segment, anchored by VMware, provides a high-margin cash engine supporting capital returns and AI investment, while overall margins remain anchored near a 77% floor. With a sum-of-the-parts valuation gap suggesting material upside versus its current enterprise value, Broadcom is increasingly viewed as the prime contractor of AI infrastructure, converting hyperscaler ambition into deployed compute at industrial scale.
Previously, we covered a bullish thesis on Broadcom Inc. (AVGO) by Daan Rijnberk in March 2025, highlighting AI-driven revenue growth, strong free cash flow, VMware-led margin expansion, and undervaluation despite improving fundamentals. AVGO’s stock price has appreciated by approximately 102.88% since our coverage. Nikhs’s Substack shares a similar view but emphasizes Broadcom’s re-rating as an AI infrastructure leader.
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.
