Broadcom Stock Price Forecast: NASDAQ:AVGO Balances AI Momentum and Valuation Risks

NASDAQ:AVGO Stock Trades Near $296 Ahead of Earnings With AI and VMware Driving Growth

Broadcom Inc. (NASDAQ:AVGO) is holding at $295.87, down 0.51% intraday, with a market cap of $1.39 trillion as the company prepares to report Q3 earnings on September 4, 2025. The stock has gained 94.6% year-over-year, far outpacing the S&P 500’s 16.8% gain, and remains just below its 52-week high of $317.35. Trading volumes average 20.5 million shares daily, with institutional ownership at nearly 80% and insiders controlling just above 2%. Short interest remains light at 1.04% of float, underscoring confidence in the company’s AI-driven momentum. Investors can track the real-time chart here.

Earnings Outlook and Revenue Expansion for NASDAQ:AVGO

Consensus estimates project Q3 revenue of $15.82 billion, up 21% year-over-year, with adjusted EPS expected at $1.66, up 34%. Broadcom’s AI semiconductor business is the key driver, with Q2 AI-related revenue of $4.4 billion, representing a 46% YoY gain, and management guiding for $5.1 billion in Q3. That would mark the tenth consecutive quarter of double-digit AI revenue growth. Non-GAAP gross margins stood at 79%, while adjusted EBITDA margins hit 67% in Q2. Free cash flow reached $6.4 billion, equivalent to more than 40% of revenue, covering both dividends and buybacks with room for debt reduction.

Valuation Pressures and Multiples

Despite Broadcom’s strong fundamentals, the stock trades at a trailing P/E of 108.5x and a forward P/E of 35.9x, considerably higher than semiconductor peers but supported by expected 36.9% EPS growth in FY25 and 24.4% in FY26. The PEG ratio of 1.39 reflects the premium pricing for growth, and the price-to-sales ratio of 25.17 is more akin to software companies than hardware peers. Enterprise value to EBITDA sits at 48.2x, again stretched historically, but offset by a projected annual free cash flow of $30 billion in FY25 and as much as $38 billion in FY26. Analysts maintain a bullish stance, with consensus price targets between $300 and $400.

Growth Catalysts: XPUs, Networking, and VMware Integration

Broadcom has positioned itself as a leading AI infrastructure supplier with custom XPUs, currently in production with hyperscalers such as Google, Meta, and ByteDance, while working toward Apple and OpenAI as customers. These chips are built on advanced TSMC nodes and are designed to support clusters of up to 500,000 XPUs, underscoring scale. Networking revenue is another powerhouse, with the Tomahawk 6 switch delivering 102.4 Tbps capacity and enabling AI clusters of over 100,000 accelerators in fewer tiers, a game-changer for high-volume training. AI networking revenue grew 170% YoY in Q2 and remains Broadcom’s fastest-growing segment.

VMware, acquired in a $69 billion transaction, is already exceeding expectations, contributing 44% of total revenue in Q2 and growing at 25% YoY. VMware Cloud Foundation (VCF) adoption among Broadcom’s largest customers exceeds 87%, building a robust ARR base with three-year contract durations. This not only stabilizes earnings visibility but also diversifies AVGO beyond semiconductors into enterprise software.

Financials and Profitability Metrics

Trailing twelve-month revenue stands at $57.05 billion, with net income of $13.24 billion, translating to a profit margin of 22.6% and an operating margin of 31.8%. Diluted EPS is $2.74, and quarterly EPS has consistently beaten consensus expectations, with upside surprises as high as 6.8%. Return on equity is 18.98%, while return on assets stands at 8.01%, both metrics reflecting strong capital efficiency for a trillion-dollar firm.

The balance sheet shows $11.11 billion in cash against $40.46 billion in debt, a debt-to-equity ratio of 166% that remains elevated after the VMware acquisition. However, Broadcom’s weighted average coupon rate is 3.8% on fixed debt and 5.3% on floating debt, leaving repayment manageable given robust free cash flow. Levered free cash flow of $26.15 billion confirms AVGO’s ability to fund expansion, acquisitions, and shareholder returns without liquidity strain.

Dividend and Shareholder Returns for NASDAQ:AVGO

Broadcom pays a forward dividend of $2.36 per share, a 0.79% yield, with an 81.6% payout ratio. While modest in yield, consistent double-digit annual increases remain supported by cash generation. The last dividend was paid June 30, 2025, with the ex-dividend date on June 20. With free cash flow far exceeding dividend obligations, Broadcom is positioned for further increases, share buybacks, and debt reduction. Investors can review all insider activity on the insider transactions page.

Technical Levels and Market Risk

The stock is consolidating just below its all-time high of $317.35. Key technical support lies at $249.05, aligned with the 200-day moving average and Fibonacci retracement levels. Deeper downside risk exists at $206.57 if momentum breaks, though such a retracement would require a steep earnings disappointment. On the upside, a break above $317.35 opens the path to $340–$360 in the near term. The stock’s beta of 1.17 signals higher volatility than the broader market, but relative strength remains intact given heavy institutional positioning.

NASDAQ:AVGO Investment Verdict

With AI-related revenue set to account for one-third of total sales and VMware diversifying the revenue base with sticky ARR, Broadcom remains a dominant force in semiconductors and software infrastructure. While valuation multiples are elevated, forward EPS growth above 30% and free cash flow approaching $30–38 billion annually justify the premium. At $295–$296 per share, the stock trades at a discount to the upper analyst targets of $340–$400, offering a favorable risk-reward profile for long-term investors who can tolerate short-term volatility around earnings.

This positioning makes NASDAQ:AVGO a Buy, with pullbacks toward $249 providing strong entry points for accumulation.

That's TradingNEWS