The Market Is Panicking on Broadcom. This Is Why I Keep Buying The Stock

I keep clicking buy on Broadcom (NASDAQ:AVGO | AVGO Price Prediction) because the math is too good to walk away from, even with a $39 trillion national debt clock ticking and new Fed Chairman Kevin Warsh signaling that borrowing costs are not coming back down on anyone’s preferred schedule. My friends ask why I am adding to the same name in the middle of a macro panic. The answer fits on a napkin: I am buying a cash machine the rest of the market is treating like a cyclical chip stock.

The thesis is simple. The global buildout of enterprise AI cannot happen without Broadcom’s custom silicon and switching fabric. CEO Hock Tan said it plainly on the June call: “Broadcom achieved record revenue, operating profit and free cash flow in Q2 driven by accelerating growth in AI semiconductor revenue and strong operating leverage.” That is the income statement talking.

The Receipts

Start with the most recent quarter. Q2 FY2026 revenue landed at $22.187 billion, up 47.9% year over year, with non-GAAP EPS of $2.44, the eighth consecutive EPS beat. AI semiconductor revenue alone hit $10.80 billion, up 143%. Operating margin came in around 49%, with free cash flow of $10.262 billion, or 46% of revenue. Adjusted EBITDA margin was 69% of revenue. Tan guides Q3 to ~$29.4 billion in revenue and $16.0 billion of AI revenue, more than 200% YoY growth. His stated long-term target is to exceed $100 billion in AI sales by 2027.

Second, the balance sheet absorbs macro shocks. Cash and equivalents sit at $19.628 billion, up 107.22%, with total liabilities down 3.76% year over year and shareholders’ equity up 26.02%. Capex in Q2 was only $231 million. That is what asset-light cash conversion looks like.

Third, the income story I actually care about. Broadcom just raised its dividend 10% to $0.65 quarterly, the 15th consecutive annual increase since fiscal 2011, while running a $10 billion buyback authorization through December 31, 2026. Full year FY2025 free cash flow was $26.914 billion. Retirement accounts get paid out of cash flow like that.

The Risk I Will Not Pretend Away

Hyperscaler concentration is real. A handful of customers drive the custom accelerator business, and the company itself flags dependence on a limited number of large customers and significant indebtedness requiring substantial cash flow for debt service. If one major hyperscaler pauses orders, near-term numbers wobble. I sit with that risk because the same call disclosed 79% YoY growth in Semiconductor Solutions and AI revenue still beating management’s own forecasts. A demand base big enough to deserve that concentration is a base I want exposure to.

Why The Buy Button Stays Active

Forward P/E sits at 36, with a PEG of 0.748 and an analyst consensus target of $523.84 against a recent price of $411.35. 44 of 48 covering analysts rate it Buy or Strong Buy. Reddit can keep posting $1.2 million loss screenshots. The 10-year holder has watched the stock compound 3,266.87%. As long as Broadcom keeps converting AI demand into 46% free cash flow, I keep buying the macro fear other people are selling.