This article first appeared on GuruFocus.
Broadcom, the semiconductor and infrastructure-software giant (NASDAQ:AVGO), slipped approximately 0.6% to $342.50 Tuesday morning as chip stocks struggled to mount a clean rebound from Monday’s AI-driven selloff. That muted reaction is striking because Broadcom’s underlying AI growth remains enormous. Investors are no longer questioning whether AI demand is strong today; they are increasingly asking how long hyperscalers can keep spending at this pace.
Broadcom’s third-quarter results showed exactly why the company has become one of the market’s biggest AI infrastructure bets. Revenue reached $29.59 billion, while AI semiconductor sales surged to $16.7 billion, up 221% from a year earlier and 54% sequentially. Management expects fourth-quarter revenue of roughly $34.8 billion, including about $21.7 billion from AI chips. That implies another $5 billion of sequential AI-chip growth in a single quarter.
The numbers make Broadcom’s exposure increasingly concentrated: AI represented about 56.4% of latest-quarter revenue and could rise to roughly 62.4% next quarter based on management’s guidance. The valuation picture adds another twist. The chart shows Broadcom at $342.495 versus a GF Value estimate of $402.41, leaving the shares 14.89% below GF Value. In other words, the stock is trading below GuruFocus’ fair-value estimate even as AI becomes a larger share of the businessbut that also means investors are demanding more proof that today’s extraordinary AI spending boom can last.
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