What changed
$AVGO — Designs and manufactures semiconductor and infrastructure software.
🎯 Q1 FY26 | Rev $19B | EPS $2.44 vs $2.40 🟢 | Margin 44.3%
💡 Consensus expects AVGO to decelerate as AI custom chip (ASIC) growth peaks, but the 48% revenue growth and 38% GAAP net margin show VMware integration and AI infrastructure demand are still accelerating. The market is underestimating the durability of AVGO's AI revenue stream and the margin expansion from software.
🏢 Business Quality: 9/10 | Valuation: fair
📉 Reward/Risk: Upside 20% to $470 (30x FY27 EPS of ~$15.50) vs downside 15% to $333 (25x FY27 EPS). Ratio 1.3:1.
🔮 Catalyst: Next earnings (late Aug 2026): revenue guidance for Q3 and full-year. Key metric: AI-related revenue (custom chips + networking) as % of total semi revenue. Failure signal: guidance below $22B or commentary of customer order cuts.