AVGO fell 13% on Treasury yield fears, yet guides $56 billion in FY2026 AI revenue backed by gigawatt-scale signed contracts through 2029. <\/p>\n<\/li>\n
As borrowing costs squeeze capex budgets, META and OpenAI are locking in AVGO’s cheaper custom ASICs over NVDA’s general-purpose GPUs. <\/p>\n<\/li>\n
AVGO trades at just 20x forward earnings despite 200% AI revenue growth guidance and free cash flow compounding at 60% annually. <\/p>\n<\/li>\n
Act now: the analyst who called NVIDIA in 2010 just named his top 10 AI stocks \u2014 and Broadcom didn’t make the cut. Grab the names FREE today<\/a>. <\/p>\n<\/li>\n<\/ul>\n I keep hitting the buy button on Broadcom<\/strong> (NASDAQ:AVGO<\/a>), and last week’s selloff handed me another reason to do it. When the 10-year Treasury yield ripped to 4.75% on July 31 and dragged AI names lower, AVGO fell 12.87% in a single week. I added again. <\/p>\n Here is what pulls me back. Broadcom designs the custom ASICs that hyperscalers like Alphabet<\/strong> (NASDAQ:GOOGL<\/a>), Meta Platforms<\/strong> (NASDAQ:META<\/a>), and OpenAI are locking into multi-year contracts to run their AI clusters. When borrowing costs climb, hyperscalers get pickier about capex, and pickier hyperscalers pick cheaper silicon over general-purpose GPUs. That is Broadcom’s edge, and rising Treasury yields sharpen it. <\/p>\n Data That Keeps Me Adding <\/p>\n Start with the AI ramp. Q2 FY2026 AI semiconductor revenue reached $10.80 billion, up 143% year-over-year. Management guided Q3 AI revenue to $16.0 billion, over 200% year-over-year, and reiterated a fiscal 2027 target of “in excess of $100 billion”. Q2 AI bookings alone were over $30 billion against $10.8 billion shipped, with Hock Tan saying visibility now extends to 2028. That pipeline sits on signed contracts, including a 3 gigawatt Meta MTIA commitment through 2028 and a 10 gigawatt OpenAI deployment by 2029. <\/p>\n Second, the profitability is already here. Q2 operating income hit $10.788 billion, up 85.07% year-over-year. Free cash flow was $10.262 billion, or 46% of revenue. Adjusted EBITDA margin landed at 69% of revenue. Cash on the balance sheet more than doubled year-over-year to $19.628 billion. Fiscal 2025 threw off $26.914 billion in free cash flow. <\/p>\n Act now:<\/strong> the analyst who called NVIDIA in 2010 just named his top 10 AI stocks \u2014 and Broadcom didn’t make the cut. Grab the names FREE today<\/a>. <\/p>\n Third, capital returns. Broadcom has raised its dividend for 15 consecutive years since fiscal 2011. The current quarterly payout is $0.65, and the company paid $3.1 billion in Q2 dividends. Management also authorized a $10 billion buyback through December 31, 2026, with $7.8 billion used in Q1 and another $600 million in Q2. <\/p>\n Why AVGO, Not Nvidia <\/p>\n NVIDIA<\/strong> (NASDAQ:NVDA<\/a>) is the reflex pick, and I own some. My money keeps landing here because Broadcom trades at a forward P\/E of 20x, a rare multiple for a business guiding AI revenue growth over 200% next quarter. Broadcom pairs that with a 15-year dividend increase streak that Nvidia’s token payout cannot match, plus the analyst target sits at $527.88. As for the Treasury bonds many retirees are reaching for, 4.65% is fair income, and it caps at 4.65%. Broadcom is compounding free cash flow at 60.07% year-over-year. <\/p>\n Risk I’m Watching <\/p>\n Customer concentration. A handful of hyperscalers drive the AI ramp. If Google, Meta, or OpenAI slow orders or shift to fully internal designs, the guidance breaks. Broadcom also carries $91.467 billion in total liabilities from the VMware deal, and higher rates make servicing that debt costlier. What blunts the risk for me is booking visibility through 2028, the gigawatt-scale contractual commitments already logged, and the fact that shareholders’ equity climbed to $87.691 billion while total liabilities actually declined 3.76% year-over-year. <\/p>\n Forward Conviction I Keep Acting On <\/p>\n Rate fear is compressing growth multiples, and AVGO now sits at $364.03, well below its 52-week high of $494.18. Full-year FY2026 AI revenue is guided to $56 billion, with the path to over $100 billion in FY2027 already backed by customer commitments. When the market marks down a business generating $26.914 billion in annual free cash flow with a 15-year dividend growth streak because the 10-year moved 5 basis points, I do not sit on my hands. I buy more. <\/p>\n Act now:<\/strong> the analyst who called NVIDIA in 2010 just named his top 10 AI stocks \u2014 and Broadcom didn’t make the cut. Grab the names FREE today<\/a>. <\/p>\n<\/a> 24\/7 WallSt <\/p>\n