Should You Buy Broadcom Stock Before Sept. 4? The Answer Might Surprise You.

Core Insights - Broadcom is a leading supplier of hardware products essential for the artificial intelligence (AI) boom, with its sales driving the company into the $1 trillion market cap club [1][2] - The company has a significant addressable market that could enhance its valuation in the long term, although its stock is currently considered expensive by traditional metrics [2][18] Company Performance - Broadcom's total revenue for fiscal Q2 2025 was $15 billion, reflecting a 20% year-over-year increase, with AI revenue reaching $4.4 billion, up 46% [9] - Management anticipates total revenue of $15.8 billion for Q3, with AI revenue expected to soar by 60% year-over-year to $5.1 billion [10] - The company's GAAP net income surged by 134% year-over-year to $4.9 billion, while non-GAAP EBITDA climbed by 35% to $10 billion [12] Market Dynamics - Tech giants are increasingly purchasing Broadcom's AI hardware, particularly its customizable AI accelerators, which provide more flexibility than traditional GPUs [5] - At least three hyperscale customers plan to deploy up to 1 million AI accelerators each by 2027, indicating a serviceable addressable market of $60 billion to $90 billion [6] Competitive Position - Broadcom is a key supplier of networking equipment for data centers, with its latest Ethernet switches offering industry-leading low latency and high throughput, crucial for AI workloads [7] - The company has a history of strategic acquisitions, spending nearly $100 billion since merging with Avago Technologies in 2016 to expand its market presence [4] Valuation Metrics - Broadcom's stock is trading at a price-to-sales (P/S) ratio of 24.3, significantly higher than its 10-year average of 8.4 [15] - The trailing-12-month earnings per share of $2.67 results in a price-to-earnings (P/E) ratio of 108.4, making it three times more expensive than the Nasdaq-100 technology index [17][18]