Base exchange rate: 1 USD = 1,476 KRW (as of 2026-04-27)
Executive Summary
Broadcom Inc. (AVGO) is a global semiconductor and software company operating on two pillars: semiconductor solutions and infrastructure software.
In particular, it has established itself as a key beneficiary of the AI infrastructure investment cycle based on its custom ASIC design capabilities for massive AI hyperscalers.
| item | detail |
|---|---|
| The current price | $422.76 (approx. 624,100 won) |
| Investment opinion | Buy |
| 12-Month Target Price (Default) | $480 (approx. 708,480 won) |
| Expected rate of return | +13.5% |
| 52-week range | $184.02 ~ $429.31 |
| Market capitalization | Approximately 1 TP 4 T 2.0 trillion (approximately 2,954 trillion won) |
Key Investment Point ① Q2 FY2026 Guidance: Revenue $22B (+47% YoY), AI Semiconductor Revenue +140% YoY, Accelerating Growth
Key Investment Points ② Securing revenue visibility through ultra-long-term custom AI chip partnerships with Meta (until 2029) and Google (until 2031), AI backlog $73B
Key Investment Point ③ Achieved a market capitalization of $2 trillion won and continues shareholder returns with strong TTM FCF of $28.9B (approximately 42.6726 trillion won).
Company Overview
Broadcom is a semiconductor and infrastructure software company founded in 1961 and headquartered in Palo Alto, California.
It features a unique business model that combines semiconductors such as networking, storage, and wireless connectivity with VMware cloud software.
Business Segment Composition (As of Q1 FY2026)
| sector | Q1 FY2026 Sales | specific gravity |
|---|---|---|
| Semiconductor solutions | $12.52B (approx. 18 trillion 479.5 billion KRW) | 64.9% |
| Infrastructure software (VMware, etc.) | $6.80B (approx. 10 trillion 389 billion KRW) | 35.1% |
| total | $19.31B (approx. 28 trillion 503.6 billion KRW) | 100% |
Key products include AI ASICs (Custom AI Accelerators), Ethernet switching and routing, fiber optic components, RAID and Fibre Channel storage, VMware Cloud Foundation, and CA Mainframe software.
The business model has a dual structure of designing and supplying customized AI semiconductors for hyperscalers (Google, Meta, Apple, etc.) and a VMware-based enterprise SaaS subscription model.
Major competitors include Marvell Technology (MRVL), NVIDIA (NVDA), Companies such as Intel (INTC) and Qualcomm (QCOM) have the deepest hyperscaler relationships in the custom ASIC field.
Financial Performance Analysis (Last 4 Quarters)
Quarterly Sales and Profit Trends
| branch | Sales (USD) | Hanwha (approx.) | YoY | Operating profit | FCF |
|---|---|---|---|---|---|
| Q2 FY25 (2025.04) | $15,004M | 22 trillion 145.9 billion won | +43.0% | $5,915M | $6,411M |
| Q3 FY25 (2025.07) | $15,952M | 23 trillion 545.2 billion won | +47.2% | $6,074M | $7,024M |
| Q4 FY25 (2025.10) | $18,015M | 26 trillion 590.1 billion won | +51.4% | $7,654M | $7,466M |
| Q1 FY26 (2026.01) | $19,311M | 28 trillion 503 billion won | +29.4% | $8,666M | $8,010M |
| TTM Total | $68,282M | 100 trillion 784.3 billion won | – | $28,309M | $28,911M |
Trends in profitability indicators
| branch | Gross profit margin | Operating profit margin | Net profit margin | FCF margin |
|---|---|---|---|---|
| Q2 FY25 | 68.0% | 39.4% | 33.1% | 42.7% |
| Q3 FY25 | 67.1% | 38.1% | 26.0% | 44.0% |
| Q4 FY25 | 68.0% | 42.5% | 47.3%* | 41.4% |
| Q1 FY26 | 68.1% | 44.9% | 38.1% | 41.5% |
The net profit margin for Q4 FY25 was high due to the impact of tax benefits (-$1.6B refund).
The operating profit margin has been steadily improving from 381 TP3T to 44.91 TP3T, and the FCF margin is also maintaining a stable level of 41 to 441 TP3T per quarter.
Financial soundness (as of the end of January 2026)
| item | Amount (USD) | Hanwha (approx.) |
|---|---|---|
| Cash and cash equivalents | $14,174M | 20 trillion 920.9 billion won |
| Total debt | $66,057M | 97 trillion 500.1 billion won |
| net debt | $51,883M | 76 trillion 579.3 billion won |
| Equity | $79,872M | 117 trillion 891.1 billion won |
| Debt-to-Equity Ratio (D/E) | 82.7% | – |
| Current ratio | 1.90 | Good |
Although massive intangible assets and goodwill (128.1B) resulting from the acquisition of VMware account for 7513B of total assets, debt is being rapidly repaid with strong FCF of 18B per quarter.
Amid a surge in demand across AI data center infrastructure Vertiv Holdings (VRT)Along with power and cooling equipment companies such as [Name], Broadcom also forms the backbone of the core supply chain for AI infrastructure.
Recent Earnings Announcement — Q1 FY2026 Earnings Surprise (March 4, 2026)
| item | Actual value | Consensus | Surprise |
|---|---|---|---|
| sales | $19.31B | $19.18B | +0.7% |
| Adjusted EPS | $2.05 | $1.88 | +9.0% |
| Semiconductor solution sales | $12.52B | $12.25B | +2.2% |
| Infrastructure software sales | $6.80B | $7.02B | -3.1% |
Q2 FY2026 guidance significantly exceeded market expectations with revenue of $22.0B (+47% YoY), AI semiconductor revenue of $14.8B (+76% YoY), and AI revenue of $10.7B (+140% YoY).
Valuation
| characteristic | Current value | S&P 500 average | Semiconductor sector average |
|---|---|---|---|
| Trailing P/E (GAAP) | 82.6x | ~22x | ~35x |
| Forward P/E (Non-GAAP FY26E) | 23.3x | ~20x | ~28x |
| P/S (TTM) | 29.3x | ~3x | ~8x |
| PEG Ratio | 0.92 | ~1.5x | ~1.2x |
| EV/EBITDA | 55.2x | ~15x | ~25x |
Although the trailing P/E appears high on a GAAP basis, the non-GAAP forward P/E of 23.3x is reasonable relative to the revenue growth rate.
A PEG ratio of 0.92 suggests that the stock price is undervalued relative to its growth rate, a valuation made possible by the very high visibility of AI ASIC orders.
When estimating fair value based on DCF, applying the AI high growth multiple (25x) and the 10% discount rate to the TTM FCF $28,911M (approx. 42.6726 trillion KRW) yields a range of $405 to $490.
Valuation Assessment: Fairly Valued — The current share price of $422.76 is within a reasonable range given the strong growth momentum, and there is room for further upside considering the visibility of AI orders.
Growth Outlook
Quarterly Sales Growth Rate Trend (YoY)
| branch | Sales Growth Rate (YoY) | significant |
|---|---|---|
| Q2 FY25 | +43.0% | VMware contributions begin in earnest |
| Q3 FY25 | +47.2% | Surge in demand for AI chips |
| Q4 FY25 | +51.4% | Highest quarterly growth rate |
| Q1 FY26 | +29.4% | Exceeding consensus |
| Q2 FY26 (Guidance) | +47.0% | AI Revenue +1401 TP3T YoY |
Key Growth Engine
① Accelerating AI Custom ASIC Business: Hyperscalers are surging demand for custom AI accelerator chips to reduce their reliance on GPUs, and Broadcom holds an overwhelming market share.
② Entrenchment of long-term partnerships: Mid-to-mid-term revenue visibility has been secured with contracts for Meta in 2029 and Google in 2031, and the AI backlog amounts to 1 TP 4 T 73 B.
③ VMware Synergy Begins in Full Swing: VMware's transition to a subscription model, acquired in 2023, provides a stable base for recurring revenue, and the infrastructure software segment is growing to approximately 1 TP 4 T 27 B per year.
④ AI Networking Demand: The demand for high-speed Ethernet and optical communication components required for building AI clusters is continuously increasing.
Total revenue for FY2026 is projected to grow by 25–301% year-over-year to 83–87%, and the non-GAAP EPS consensus is expected to improve significantly to 18.12% compared to the GAAP Trailing EPS of 5.12%.
Target Price Scenario (12 Months)
| scenario | Probability | Target price | reason |
|---|---|---|---|
| Basic scenario | 50% | $480 (approx. 708,480 won) | FY26E EPS $18.12 × P/E 26.5x |
| Bullish scenario | 25% | $580 (approx. 856,080 won) | AI Revenue 1,401 TP 3T Continued Growth + P/E Re-rating 32x |
| Bearish scenario | 25% | $380 (approx. 561,080 won) | Tariff Impact + Economic Slowdown + P/E Compression 21x |
Expected Rate of Return Calculation: (0.5 × $480 + 0.25 × $580 + 0.25 × $380 – $422.76) / $422.76 = +13.5%
The Strong Buy consensus of 42 analysts and the average target price of $475.49 (median $477.5) are also consistent with the base scenario of $480.
Recent Major Issues (Last 3 Months)
① Signed multi-year contract with Meta for AI chips (April 14, 2026)
We have entered into a multigenerational partnership with Meta to jointly develop and supply the next-generation AI accelerator, MTIA (Meta Training and Inference Accelerator), by 2029.
Meta has pledged an initial deployment of 1 GW and plans to expand to several gigawatts in the future.
② Long-term TPU contract with Google (Early April 2026)
Google has extended its next-generation TPU development partnership until 2031.
Broadcom also plays a key role in Anthropic's plan to utilize Google's 3.5GW TPU capacity.
③ Achieved Market Cap of 1 TP 4 T 2 Trillion Won (2026.04.22)
With the stock price approaching a 52-week high ($429.31) at $422.65, it surpassed a market capitalization of $2 trillion, joining the $2 trillion club following Apple, Nvidia, and Microsoft.
④ Q1 FY2026 Earnings Announcement (March 4, 2026)
Revenue of 19.31 billion (+291% YoY) and adjusted EPS of 2.05% significantly exceeded market expectations.
The Q2 guidance of $22B significantly exceeded the consensus ($20.5B) and served as a catalyst for the surge in stock price.
Key Risk Factors
① Customer Concentration Risk: Due to the concentration of AI chip sales on a small number of hyperscalers such as Google, Meta, and Apple, revenue could be negatively impacted if specific customers change their strategies.
② Tariff and Trade Regulation Risks: There is a possibility of global supply chain disruptions if the U.S.-China trade conflict intensifies and semiconductor export controls are expanded. It is also exposed to geopolitical risks due to its high dependence on TSMC for production.
③ Intensified competition: Marvell Technology (MRVL)Amazon is growing aggressively in the custom chip market, and the possibility of Big Tech companies internalizing their own chip development is also a risk.
④ High debt burden: Long-term debt related to the VMware acquisition is $63.8B (approximately 94.2288 trillion KRW), and interest expenses are at the quarterly level of $800M, which could increase the financial burden in a rising interest rate environment.
⑤ Valuation Risk: With a high valuation (EV/EBITDA 55x) reflecting expectations for AI growth, there is a risk of sharp multiple compression if growth momentum slows.
Risk mitigation factors include a long-term contract-based order backlog ($73B), an increased proportion of recurring revenue (VMware subscriptions), and strong FCF generation capabilities at the quarterly level of $8B.
Investment Opinion — Buy
Broadcom has achieved a unique positioning in the AI infrastructure investment cycle by combining ASIC design capabilities with a software portfolio.
Meta and Google's ultra-long-term agreement provides revenue visibility for the coming years, and the guidance of 1 TP4T22B (+471 TP3T YoY) for Q2 FY2026 and the AI revenue growth forecast of +1401 TP3T are very strong growth signals.
The forward P/E of 23.3x and PEG of 0.92 are reasonable relative to growth, and the Strong Buy consensus from 42 analysts and the average target price of $475 also support the buy opinion.
| item | detail |
|---|---|
| Investment opinion | Buy |
| Confidence | Medium-High |
| Investment period | 12 months |
| Position Offer | Core position 3~5% |
| Major upstream catalyst | Q2 FY26 Guidance Exceeded, Additional Hyperscaler Partnerships |
| Major downside risks | Increased tariff impact, economic recession, early end of AI investment cycle |
To understand the competitive landscape and major leading companies of the AI semiconductor market NVIDIA (NVDA) Analysis ReportReferring to this together will also be helpful in making investment decisions.
This report is prepared for informational purposes only, and the responsibility for investment decisions lies solely with the investor. Stock investments carry the risk of loss of principal.
Data Recent Date: 2026-04-27 | Stock Price Data: Yahoo Finance | Exchange Rate: 1 USD = 1,476 KRW
※ This article was written based on publicly available data with the assistance of AI research tools, and the content was reviewed by the author prior to publication. It is for informational purposes only and does not constitute an investment recommendation.