Broadcom

AVGO

Market cap $1.61T

Nvidia is the dominant player in AI infrastructure, but it is starting to face more competition. Broadcom is increasingly becoming the company others turn to in order to help create custom AI chips.

Broadcom maintains a "Strong Buy" rating, driven by robust AI-fueled growth and impressive Q4 results. AI semiconductor sales surged 74%, propelling total sales up 28% and operating income up 62%, with gross margins expanding to 68%. Q1 guidance calls for 28% sales growth to $19.1 billion, with AI semiconductor sales expected to double and EBITDA margins at 67%.

Broadcom is reiterated as a buy, driven by robust AI-fueled growth and strong fundamentals. Valuation has also contracted. The company posted record Q4 revenues of $18.015B (up 28% YoY), with AI semiconductor revenue surging 74%. Profitability metrics also improved. Guidance for Q1 FY2026 is strong, with revenue expected at $19.1B and margin concerns viewed as overblown given the business mix shift.

Broadcom stock sank today amid bearish momentum for the broader market. The company's share price declined in response to bank earnings and news that China may not be taking Nvidia's H200 chips.

Broadcom stock (NASDAQ: AVGO) tumbled roughly 5% on Wednesday following Reuters reports that Chinese authorities instructed domestic companies to stop using cybersecurity software from about a dozen US and Israeli vendors. The list includes Broadcom-owned VMware and compounded already fragile investor sentiment around margin compression.

Despite ending the year in disappointing fashion, semiconductor behemoth Broadcom NASDAQ: AVGO soared in 2025. Overall, shares delivered a total return of 51% for the year.

@Theotrade's Don Kaufman is back to being a bear on today's Big 3. He explains his bearish theses and offers example options trades in Costco (COST), the iShares MSCI Emerging Markets ETF (EEM), and Broadcom (AVGO).

China is seeking to replace U.S. and Israeli technology with its domestic firms. Not only will it limit Nvidia (NVDA) chips on an occasional basis, but China issued cybersecurity and chip bans against companies like Palo Alto Networks (PANW), Fortinet (FTNT) and Broadcom (AVGO).

The S&P 500 Index (SPX) has gotten off to a solid start in 2026, but history suggests next week may be more challenging.

Despite the past year's stock market volatility, the explosive demand for semiconductors and microchips that has grabbed news headlines and led the market higher over the past few years remains.