Stacy Rasgon’s Prediction About Broadcom (AVGO) Was Right

Core Viewpoint - Broadcom Inc. (NASDAQ:AVGO) is positioned favorably in the AI and software markets, with significant growth in AI revenue and a strong performance in both semiconductor and software segments [1][2]. Group 1: AI Demand and Revenue - AI demand is described as "off the charts," with Broadcom expecting $6.2 billion in AI revenue for the fiscal fourth quarter, representing a 66% increase year-over-year [2]. - The company secured $10 billion in AI infrastructure orders from a new customer, speculated to be OpenAI, indicating strong market interest and potential for future growth [2]. Group 2: Financial Performance - Broadcom's AI business achieved a quarterly run rate of $4.1 billion, up 77% year-over-year, contributing to a solid ramp in semiconductor revenue despite declines in non-AI segments [2]. - The company reported an 80% increase in stock price over the past six months, reflecting investor confidence in its growth trajectory [2]. Group 3: Strategic Positioning - Approximately 60% of Broadcom's revenue comes from semiconductors and 40% from software, with a focus on high-performance AI compute and networking solutions [2]. - Management anticipates continued momentum in AI and steady software execution, with a more pronounced AI ramp expected in the second half of the fiscal year [2]. Group 4: Market Dynamics - Despite strong quarterly results, the stock experienced a pullback due to broader market concerns related to tariffs and trade relations, similar to trends seen with NVIDIA [2]. - Broadcom's lead customer, Google, has launched its 7th generation TPU, and confidence in additional partnerships is expected to bolster growth in the AI sector [2].