Broadcom: The Backlog Fortress - Operating Leverage Decoupling
Summarize this article with:
Esxeleryn Analytics195 FollowersFollow5ShareSavePlay(13min)CommentsSummaryBroadcom Inc. is rated Buy, driven by a robust $73B AI hardware backlog and VMware integration, supporting topline visibility through FY2026.AVGO's two-engine model—custom silicon XPUs and high-margin VCF software—reduces hyperscaler dependency and enables scalable, recurring revenue streams.Despite a forecasted 100bps gross margin contraction from AI hardware mix, AVGO's EBITDA run-rate exceeds $51B, supporting multiple expansion and dividend growth.DCF analysis indicates 58% upside to $569/share; current pullback offers attractive entry between $365 and $275, with gross margin floor and VCF bookings as key monitorables. JHVEPhoto/iStock Editorial via Getty Images My investment argument assigns Broadcom Inc. (AVGO) a Buy rating based on its progressive 2-engine business model. One engine is the accelerating commercialization of XPUs, and the second is the VMware backlog. The reasoning comes fromThis article was written byEsxeleryn Analytics195 FollowersFollowA trader, researcher, and analyst possessing experience spanning years in the domains of US stocks, transnational equities, global indexes, commodities, FX/interest securities, cryptocurrencies, ETFs, options, futures, and CFDs. My expertise encompasses fundamental analysis, technical analysis, quantitative analysis, portfolio management, investment/capital mapping, and programming.Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.