Broadcom Inc. (AVGO): A Bull Case Theory

Group 1 - Broadcom Inc. is experiencing a transition from sustaining growth to accelerating growth, driven by a structural shift in AI demand and a strengthening software cash engine [2] - AI semiconductors have reached $5.2 billion in quarterly revenue, with custom XPUs making up 65% of the mix, indicating strong partnerships with hyperscalers [3] - The company has provided Q4 AI guidance of $6.2 billion, with management expressing confidence in significantly higher growth next year [4] Group 2 - The VMware acquisition has become a powerful private-cloud utility, generating 77% operating margins and $7 billion in free cash flow [4] - Over 90% of top customers have transitioned to subscription models, allowing Broadcom to enter Phase 2 of monetization by upselling security and disaster recovery services [4] - Despite some gross-margin pressure from a higher XPU mix, operating and EBITDA margins remain strong at approximately 65% and 67%, supported by a $110 billion backlog [6] Group 3 - Broadcom is positioned as a dual-moat business, being an AI connectivity leader backed by a resilient and expanding software franchise [6] - The stock price of Broadcom has appreciated approximately 106.07% since the previous bullish thesis coverage, indicating successful execution of the company's strategy [7] - The current thesis emphasizes accelerating AI visibility and the dual-moat model, aligning with previous analyses [7]