Is Broadcom Stock a Buy for 2026?

By Keithen Drury – Jan 10, 2026 at 11:17PM ESTKey PointsBroadcom's custom AI computing units are becoming a larger part of its business.Wall Street analysts expect monster growth over the next few years.Investors must pay a premium to own Broadcom stock. We’re bullish on these 10 stocks ›NASDAQ: AVGOBroadcomMarket Cap$1.6TToday's Changeangle-down(3.76%) $12.49Current Price$344.97Price as of January 9, 2026 at 4:00 PM ETBroadcom is coming off an incredible 2025.Broadcom (AVGO +3.76%) had one of the best years of the big tech stocks. It rose nearly 50% for the year, outperforming Nvidia (NVDA 0.10%) by 10 percentage points. That's an impressive run, but the real question is, can Broadcom keep that momentum up in 2026? I think Broadcom has a great chance to outperform the market in 2026 and is well worth buying. But why is Broadcom a top stock pick for 2026? Let's find out. Image source: Getty Images. Custom AI chips are becoming Broadcom's top product Broadcom does a lot of business in the tech sector. It provides cybersecurity software, mainframe hardware and software, and virtual desktop software through VMware, a company it acquired a few years back. This business might be at Broadcom's core, but there is another, more exciting business unit that's really gaining momentum. Broadcom is taking a different approach to the artificial intelligence computing hardware game. Instead of designing a broad-purpose graphics processing unit (GPU) as Nvidia did, it's partnering directly with AI hyperscalers to design custom computing units tailored to their needs. This strategy fills a gap in the offerings available on the market, and they are becoming great alternatives to Nvidia GPUs. ExpandNASDAQ: AVGOBroadcomToday's Change(3.76%) $12.49Current Price$344.97Key Data PointsMarket Cap$1.6TDay's Range$333.50 - $347.3952wk Range$138.10 - $414.61Volume22MAvg Vol29MGross Margin64.71%Dividend Yield0.70% However, they're not a direct GPU replacement.Advertisement Broadcom's custom AI chips are known as ASICs, application-specific integrated circuits. They are set up to run one speicific kind of workload. Limiting flexibility can be an issue in many scenarios, but if all of these computing units are running a single workload type, then they can shine. Furthermore, because Broadcom and the AI hyperscalers have cut the middleman out, these units are far cheaper. That's an exciting combination, and there's a reason why the market is so bullish on Broadcom's stock. Right now, Broadcom's AI semiconductor business makes up a meaningful part of its overall business, but it isn't the dominant component. That's expected to change in 2026. In the fourth quarter of its fiscal year 2025 (ending Nov. 2), Broadcom's AI semiconductor revenue totaled $6.5 billion, up 74% year over year. As a whole, Broadcom's revenue totaled $18 billion, up 28% year over year. So, AI semiconductor revenue makes up more than a third of its business. But that balance is starting to shift. In Q1, Broadcom expects AI semiconductor revenue to total $8.2 billion, up 100% year over year. Overall, it expects $19.1 billion in total revenue. So, in Q1, AI semiconductor revenue will make up nearly half of Broadcom's total. That number is expected to increase throughout the year as more companies order Broadcom's custom AI chips and new customers come online. This is the core of Broadcom's investing thesis, and it's incredibly promising. Wall Street analysts project Broadcom's FY 2026 revenue will grow at a 51% pace, and next year's revenue to grow at a 36% pace. That's an incredibly bullish outlook, making Broadcom a top stock to consider for 2026, but is the price right? Broadcom carries a premium price tag The market is well aware of Broadcom's promising future. As a result, it has a premium valuation. Broadcom trades for 34 times forward earnings, not a cheap price tag. AVGO PE Ratio (Forward) data by YCharts For comparison, Nvidia trades for 25 times FY 2027 earnings (ending January 2027). That's a sizable premium that you have to pay to own Broadcom, and the investment thesis between these two couldn't be more different. An Nvidia investment is a bet that its dominance is going to continue. A Broadcom investment is a bet that it will disrupt the current king of AI computing. It's a lot harder to dethrone a company than maintain one, so I'd give the edge to Nvidia here. Broadcom has huge potential, but you have to pay up for that, whereas Nvidia has already achieved it. I'm more bullish on Nvidia than Broadcom, but I think both will do well in 2026 and beyond.Read NextJan 10, 2026 •By Geoffrey Seiler3 Top Artificial Intelligence Stocks to Buy in JanuaryJan 9, 2026 •By Scott LevineWhy Broadcom Stock Is Rising TodayJan 9, 2026 •By Rick MunarrizCathie Wood Goes Shopping: 3 Stocks She Just BoughtJan 8, 2026 •By Beth McKennaWhy Broadcom Stock Fell 14.1% in DecemberJan 7, 2026 •By Geoffrey Seiler3 Red-Hot Growth Stocks to Buy in 2026Jan 6, 2026 •By Danny Vena, CPAWhy Broadcom Stock Spiked 49% Higher in 2025, and Why There's Likely More to Come in 2026About the AuthorKeithen Drury is a contributing Motley Fool technology analyst covering AI, semiconductors, cybersecurity, and SaaS stocks. In addition to The Motley Fool, Keithen is a mechanical engineer and has held roles at Honeywell and smaller industrial companies like Brand Hydraulics and Lincoln Industries. He holds a bachelor’s degree in mechanical engineering from Dordt University.TMFTripleOptionStocks MentionedBroadcomNASDAQ: AVGO$344.97 (+0.04%) $+12.49NvidiaNASDAQ: NVDA$184.86 (0.00%) $0.18*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.Advertisement