Broadcom Stock Has Lost Nearly 40% From Its Record. I'd Buy It Now.
The AI chip giant's stock is back at its August 2025 price. Should buyers wait for December's results?
Broadcom's stock price plummeted to $291.53 on November 5, marking a 40% decline from its June 2 record close of $481.57. Despite the market-wide decline in chip stocks, Broadcom's business fundamentals have improved since its last trading low. Revenue has nearly doubled and non-GAAP earnings per share have more than doubled. Broadcom's AI semiconductor revenue reached $16.7 billion in the fiscal third quarter of 2026, four times the $4.4 billion generated in Q2 2025.
Free cash flow more than doubled as well, reaching $13.7 billion. Adjusted earnings per share more than tripled over the same period, indicating strong growth. Management forecasts revenue to increase 93% year-over-year for the fiscal fourth quarter ending November 1, with AI semiconductor revenue accounting for $21.7 billion. CEO Hock Tan projected Broadcom will supply another 5 gigawatts of AI computing capacity for fiscal 2027 and Alphabet's Google plans to deploy multi-tens of billions of dollars of Broadcom's AI chips annually over the next several years.
While memory-heavy custom chips are compressing Broadcom's gross margins, the company still expects an adjusted operating margin of around 66%, flat compared to the previous quarter. Analysts estimate Broadcom's forward price-to-earnings ratio at approximately 15, suggesting the current stock price of $292 is under 10 times its expected fiscal 2028 earnings.
Despite a potential sell-off after the fiscal fourth-quarter report, the author believes Broadcom's recent financial performance justifies the current price as a reasonable entry point.
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