What's Happening With AVGO Stock?

Core Insights - Broadcom Inc. has significantly outperformed the market with a 50% increase over the past twelve months, compared to the S&P 500's 15% rise, driven by demand for AI chips and the VMware acquisition [2] - The stock has shown long-term growth of over 550% since early 2023, attributed to a 369% increase in the price-to-sales (P/S) ratio and a 92% revenue growth from $33 billion to $64 billion [3] Group 1: Valuation Surge - The market has revalued Broadcom from a mature semiconductor firm to an AI infrastructure growth enterprise, securing significant contracts such as a 10-gigawatt deal with OpenAI [5] - AI revenue has increased for thirteen consecutive quarters, with Q4 fiscal 2025 AI semiconductor revenue rising 74% year-over-year to $6.5 billion, and full-year fiscal 2025 AI revenue reaching $20 billion, a 65% increase [6][11] - The P/S ratio is currently around 26x, significantly higher than the five-year average of 10x, reflecting the company's transition to a vital AI infrastructure supplier [7] Group 2: Revenue Growth Factors - The near-doubling of revenues is driven by AI semiconductors and the VMware acquisition, transforming Broadcom into a diverse AI infrastructure and enterprise software powerhouse [8] - The VMware acquisition, finalized in November 2024, has generated over $6 billion in quarterly revenue by mid-2025, compared to under $2 billion prior to the acquisition [11] Group 3: Share Count Increase - The 15% rise in outstanding shares is linked to the financing of the VMware acquisition, where new shares were issued as part of the $69 billion transaction [9] Group 4: Future Outlook - Broadcom's stock is currently trading around $350 per share, with an average analyst price target of $460, indicating potential for further growth [10][12]