With Broadcom (AVGO) back in favor, we look at the latest moves and earnings performance of one of the most popular second layer AI plays in the tech sector following a Q1 opening position by Stanley Druckenmiller's Duquesne Family Office.
In addition to opening a fresh position in AVGO stock, Duquesne sold down both Alphabet (GOOG) (GOOGL) and Amazon (AMZN) in Q1, suggesting rotation into the pick-and-shovel side of artificial intelligence.
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About Broadcom Stock
Broadcom provides custom AI accelerators, networking semiconductors, connectivity, software solutions, and infrastructure services. It has a market capitalization of $1.96 trillion. AVGO stock's current trading price represents an 82.4% gain from the company's 52-week low of $231.13 and trading 4.71% below its 52-week high of $442.36.
www.barchart.com While valuation metrics certainly have their drawbacks, it is hard not to see that Broadcom stock is priced for performance in today's market. Trading at 41.81 times forward earnings, 30.72 times revenues, and 53.76 times cash flow, the question of value is definitely debatable. But the combination of a 36.2% profit margin, a 38.61% ROE, and accelerating AI revenue make the high valuation somewhat reasonable.
AVGO also offers a quarterly dividend yield of $0.65 per share, although clearly growth, not income, remains its key attribute right now.
Broadcom Beats on Earnings
Broadcom's fiscal Q1 2026 revenue was $19.31 billion, marking a 29% year-over-year (YOY) increase. GAAP net income of the period amounted to $7.35 billion, while non-GAAP net income totaled $10.19 billion. Non-GAAP earnings per share were at $2.05 and adjusted EBITDA was $13.13 billion, or 68% of revenue.
Most impressive of all numbers reported were the figures pertaining to AI revenue. In Q1 2026, AI revenue jumped by 106% compared to the prior-year period and reached $8.4 billion, mostly on account of custom AI accelerators and AI network infrastructure products. AI revenue is the reason Broadcom is currently viewed as one of the biggest winners on the AI angle.
On top of that, the company issued a Q2 guidance, suggesting a revenue target of around $22 billion, which means 47% YOY growth. Adjusted EBITDA in the next quarter should stay close to 68% of revenue. Finally, Broadcom announced plans to start another $10 billion repurchase program and return $10.9 billion to stockholders via dividends and buybacks in Q1.
What Do Analysts Think About Broadcom Stock?
Analysts maintain positive expectations on AVGO stock assigning a “Strong Buy” rating. Analysts have a mean price target of $479.40, with the high target at $630 and the low target at $360. The current price implies that the mean price target of $479.40 translates into potential upside of 13.8%.
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www.barchart.com On the date of publication, Yiannis Zourmpanos had a position in: AVGO . All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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