Is Broadcom Stock a Buying Opportunity for 2026? | AVGO Stock Analysis

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브로드컴은 2016~2024년 매출이 약 4배 성장(CAGR 19%)한 우량 기업이며, VMware 인수 후 시너지 실현이 기대된다. 다만 현재 선행 PER 45배로 역사적 고점 부근이며, DCF 적정가 374달러는 현재가 381달러와 비슷해 약간 고평가로 본다. 등급은 보유를 유지하고, 10~15% 하락 시 매수 관심을 가지겠다는 입장이다.

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01. Broadcom has been one of the bigger beneficiaries of the rising effectiveness of AI. Its stock price is up over 64% year-to date in 2025 and investors are asking me if this is a buying opportunity for 2026 and beyond. I'll answer that question in this video by evaluating the company more closely, looking at their revenue growth history, their profit margins, and returns on invested capital.

02. I'll weigh that all against the valuation to determine if at the current market price if it's an attractive investment opportunity for long-term investors. &ool.com/parkkev for the 10 best stocks to buy now. So, we noticed a few things about Broadcom's revenue looking back a decade from 2016 to 2024, the most recent trailing 12-month period we have data for.

03. It's increased from 13 billion to 52 billion. That's a phenomenal increase nearly 4x. Good for a compounded annual growth rate of 19%. We also see a big spike here from 23 to 24 from 36 billion to 52 billion. That's mostly related to an acquisition of VMware that the company made which then they incorporate the revenue into their own revenue and that creates a surge in revenue.

04. Now typically I downplay acquisitions for companies but this is something that Broadcom has done repeatedly. This is something they've gained skill. This is something where I see them as one of the businesses that's done a great job making acquisitions and I can't say that for very many companies. It's difficult to make an acquisition and make it work.

05. A lot of times management teams overpay for the acquisition they make. They get too excited about the potential synergies and all the things they could do after they make the acquisition and most often it doesn't work out. But there are a few companies like Broadcom that have demonstrated skill in this regard.

06. And so this is yet another point of evidence in the VMware acquisition where Broadcom is demonstrating its skill in making acquisitions on top of its myriad of other skills and now it's benefiting from the rising effectiveness of AI. it's participating and the management team said that revenue from artificial intelligence is accelerating.

07. So I mentioned that they recently made an acquisition and you can see the impact of the acquisition here in their return on invested capital from 2023 to 2024 a big drop from 26 to 8%. And this almost always happens when a company makes an acquisition. Their profits, their margins, their returns on invested capital take a big drop off because of the accounting of the acquisition.

08. A lot of the costs are front-loaded. A lot of the costs are happening when the company makes the acquisition and then the benefits happen later on down the road as the company realizes the synergies. And if you're curious about what kinds of synergies are available, the most obvious are redundancies, right?

09. If you think about two different companies, those two different companies have, let's say, a combined $100 billion in revenue. But to generate those $100 billion in revenue, they need two accounting departments, two marketing departments, two legal departments, two human resources departments, two boards of directors, two corporate headquarters, and on and on and on.

10. You can think about the redundancies. And so when you make that two different entities into one entity, you don't need two human resource departments. You don't need two marketing departments. And so you can still generate the $100 billion in revenue, arguably more, and at the same time, you don't need as many individuals or as many costs to generate that 100 billion in revenue.

11. And therefore, you create synergy and you create more profits from existing revenues. And over time, you realize those synergies, but initially you get a big decrease. So if we exclude that from its results, we notice an ROIC that's been increasing from -2.4% in 2016 all the way up to 26% in 2023. Their cash flow from operations to sales ratio similarly took a big dip because of the acquisition falling from 50% down to 39%.

12. Uh otherwise, Broadcom is one of the most profitable companies in the world when measured by operating cash flow to sales or when measuring by operating margin. It's a great business, very lucrative, and the management team said they're confident that they will realize the synergies and the overall company profitability will return to levels from before the acquisition relatively soon.

13. And so let's look at valuation now. So let's look at the market multiples where Broadcom is trading at a forward PE of 45 and a forward price to operating cash flow also of 45. It's near the most expensive it's traded for according to the market multiples valuation going all the way back to early 2024 and I can go back a longer period.

14. This is the most expensive this stock has traded for in a long time. Investors are very optimistic about Broadcom because of the company's lucrative profit margins to begin with, but now it's also benefiting from the rising effectiveness of AI, which is creating an accelerating demand for that part of its business that go into the data center optimized for AI.

15. So I also calculated a fair value for Broadcom utilizing my proprietary DCF framework and I updated my calculation today and Broadcom got a big increase. Previously, I had calculated an intrinsic value around 290 and I incorporated new metrics, new growth prospects for the company's free cash flow starting in fiscal year 2027, which the analysts on Wall Street believe the company will generate billions more in revenue than they initially expected to begin 2025.

16. It signed so many lucrative deals. And so, the intrinsic value per share increased to 374 compared to the current market price of 381. According to this valuation method, it looks fairly valued. According to the forward multiples method, it looks slightly overvalued. And so looking at it comprehensively, the business looks, I would say slightly overvalued.

17. And so I've had the stock rated as a hold since October 13th. And I'm going to reiterate that rating. I think this price is a little bit too high at the current market prices given the current uh environment. I would like to see something like 10 to 15% lower for this stock before I started becoming interested in buying this stock going forward for 2026.