Because Broadcom Monetizes Alphabet, Meta, and OpenAI at Scale I Buy Again and Again

Broadcom (AVGO) anticipates $230 billion in AI revenue by fiscal 2028, with Q3 AI chip sales surging 221% year-over-year to $16.7 billion. CEO Hock Tan asserts that custom XPUs outperform Nvidia GPUs at half the cost, making every hyperscaler a long-term Broadcom customer. The company converts 46% of revenue to free cash flow and has raised its dividend annually for 15 consecutive years since 2011.

Analysts did not include AVGO in their top 10 stocks to buy, but the author continues to buy Broadcom shares due to its custom accelerator toll road for AI giants like Alphabet, Meta, OpenAI, and Anthropic. Q3 2026 results show revenue up 85.5% year-over-year at $29.59 billion, with AI semiconductor revenue up 221% YoY and 54% sequentially at $16.70 billion.

Guidance for Q4 suggests AI chip revenue of roughly $21.7 billion, up 236% YoY. The company has six XPU customers, with commitments totaling multi-tens of billions of dollars annually. Broadcom's TPU v8i is expected to be comparable to, or surpass, the NVIDIA GPU, and Jalapeno is projected to outperform Grace Blackwell for inference workloads.

The author believes that every hyperscaler co-developing custom silicon with Broadcom will become a long-term customer, making customer concentration a significant risk factor. The five-year total return for AVGO is 720.39%, and the ten-year return is 2,849.28%.