Broadcom stock: AVGO shares trade below peak despite strong AI chip revenue
Broadcom (AVGO) shares are down about 31% from their all-time high, even as the chipmaker reported $16.7 billion in AI semiconductor revenue for its fiscal third quarter.
Broadcom (NASDAQ: AVGO) shares have drawn renewed attention from investors searching for "avgo stock," even as the company's latest results point to strong demand for its artificial intelligence chips. According to a Motley Fool analysis published on Yahoo Finance, the stock is down 31% from its all-time high and about 4% lower since the start of 2026, despite better-than-expected business numbers.
A sell-off that followed weak guidance elsewhere
The most recent pressure on the stock came on a Friday, when Intel's disappointing fourth-quarter guidance set off a broad sell-off in semiconductor shares. Broadcom was caught in that move. A separate GuruFocus report also described a decline of 1.49% in Broadcom shares, linking the stock's weakness to concerns about residual-value risk tied to a $63 billion AI financing arrangement.
Analysts quoted in the Motley Fool piece describe a gap between the share price and the company's operating performance. That gap is the central point of the debate among investors.
AI revenue beat the company's own target
Broadcom reported $16.7 billion in AI semiconductor revenue for its fiscal third quarter, above the $16 billion level the company had targeted. That figure was up 221% from a year earlier and 54% higher than the previous quarter. Total third-quarter revenue reached $29.6 billion, up 86%, and free cash flow came in at $13.7 billion.
Chief Executive Hock Tan projected AI semiconductor revenue of $21.7 billion for the fourth quarter, which would represent 236% year-over-year growth. The Motley Fool analysis said that guidance was stronger than the company's recent performance had suggested it would be.
Google partnership and valuation questions
Broadcom helps design Google's custom Tensor Processing Units, which compete with Nvidia's more general-purpose graphics processors. Google's expanding partnership with Marvell Technology has raised questions about whether Broadcom could lose some of that business. The Motley Fool analysis said the latest quarter and guidance suggest demand for Broadcom's custom AI accelerators and networking products remains very strong, though it did not eliminate the competitive risk.
The stock trades at 28.3 times forward earnings, a premium valuation. Investors are paying for expected growth, and any slowdown in AI infrastructure spending could weigh on shares. A Seeking Alpha article titled "With Next Year's Revenue Doubling, It's A Buy That's Cheaper Than It Looks" takes a similar bullish view on valuation, though its full text was not available for this report.
What we know so far
Broadcom's recent numbers have exceeded targets, while the share price remains well below its peak. The main open questions are whether AI spending holds up, how the Google relationship evolves as competitors expand, and whether the company's financing arrangements carry risks that have not been fully explained. Investors will be watching the company's next earnings update for evidence on whether the fourth-quarter AI revenue forecast is met.
This article is for information only and is not investment advice.
