On October 13, Micas Networks announced three new switches built on Broadcom’s Tomahawk 6 chip. One of them is a compact co-packaged optics (CPO) switch using Broadcom’s Tomahawk 6-Davisson, with production expected in early 2027. I believe that matters because Broadcom’s CPO has mostly been used by large cloud companies so far. A switch from an independent vendor could give other data centers a way to adopt the technology too. It also highlights how long Broadcom Inc. (NASDAQ:AVGO) has been at this.
Davisson is its third generation of CPO switches, following its first in 2021. It can move 102.4 terabits of data per second, which Broadcom says was double any other CPO switch available when it launched in October 2025. Broadcom’s latest CPO switch highlights its role in next-generation data centers but its only 4th on our list of Top 10 Co-Packaged Optics (CPO) Stocks to Buy in 2026.
Why Broadcom’s Headstart Matters
Being early only counts if the technology works, and Broadcom has the proof. In a paper presented in October 2025, Meta tested Broadcom’s previous-generation CPO switches for one million cumulative device hours without a single link failure. It also found they used 65% less power per lane than traditional pluggable optics (about 35% less than linear-drive optics). Reliability has been the main worry holding CPO back, so that kind of data is hard for rivals to match. Davisson hasn’t published equivalent data yet, and Broadcom isn’t alone: Nvidia’s Spectrum-X Photonics CPO switch is now in full production, with CoreWeave, Lambda, and Oracle among its early adopters. Still, I think Broadcom’s years of field data give it a strong position when customers are ready to make the switch. The company’s years of CPO development could pay off as adoption expands. But which other stocks Reddit users think could take off?
Growth Makes the Premium Look Reasonable
Broadcom trades above its historical average, and the premium makes sense to me. The forward non-GAAP P/E of 30.43x is about 11% above its 5-year average, while the forward Price-to-sales ratio of 15.98x is 22% higher. The EPS outlook helps justify the multiples. Analysts expect earnings to rise about 71% this fiscal year and 66% the next. That would bring the P/E down to roughly 18x on fiscal 2027 earnings. CPO is still a small part of Broadcom’s business today, and much of that growth comes from its custom AI chips. Still, CPO gives Broadcom another way to grow as AI networks get bigger. Broadcom carries about $35 billion in net debt, which seems manageable for a $1.69 trillion company.
Hedge fund ownership held fairly steady as funds holding Broadcom slipped from 173 in Q1 to 170 in Q2. The value of their stakes fell from $32.8 billion to $29.1 billion.
Broadcom has spent years proving CPO works. As the technology spreads beyond the largest cloud companies, I think its head start could help it win a meaningful share of that new demand.
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