I keep hitting the buy button on Broadcom (NASDAQ:AVGO | AVGO Price Prediction), and every quarter Hock Tan gives me a fresh reason to do it again. I own the boring chipmaker, keep adding on weakness, and the last four quarters keep telling me I am not early enough.
The thesis: every AI cluster needs custom accelerators and Ethernet fabric before GPUs can talk to each other. Broadcom sells that wiring under multi-year commitments that turn a volatile silicon cycle into something closer to a toll road.
The Data Doing the Arguing
AI semiconductor revenue hit $10.80 billion in Q2 FY2026, up 143% year over year, and Tan guided Q3 to $16 billion, up over 200% year on year. He put full-year 2026 AI revenue at $56 billion and fiscal 2027 at in excess of $100 billion. Q2 AI bookings landed at over $30 billion against $10.8 billion shipped, which is why he said visibility “extends into 2028.”
Q2 free cash flow was $10.26 billion, or 46% of revenue. Adjusted EBITDA margin ran at 69%. Operating income rose 85.07% year over year on 48% revenue growth. Cash on the balance sheet climbed to $19.63 billion, up 107.22% year over year, while total liabilities fell 3.76%.
The dividend was raised 10% in Q4 FY2025 to $0.65 per share, marking 15 consecutive annual increases since fiscal 2011. A fresh $10 billion buyback was authorized in March 2026, and management already put $7.8 billion of that to work in Q1. Eight straight EPS beats round it out.
Why Not the Obvious Names
Why not just pile into NVIDIA (NASDAQ:NVDA) or Advanced Micro Devices (NASDAQ:AMD) or Marvell Technology (NASDAQ:MRVL)? First, none pair AI exposure with a 15-year rising dividend the way Broadcom does, and my retirement account needs the income compounding. Second, Broadcom is the counterparty for custom silicon hyperscalers build instead of buying merchant GPUs, with named commitments from Google, Meta, OpenAI, and Anthropic, including a 1.3-gigawatt OpenAI deployment in 2027 and a 3-gigawatt Meta program through end of 2028. Own the toll booth, and you are indifferent to which car wins the race.
The Risk I Am Not Dismissing
Concentration is real. A handful of hyperscalers drive the AI number, and the filing flags “dependence on limited number of significant customers” as a risk. What keeps me buying is the backlog shape: $30 billion of Q2 bookings and gigawatt commitments stretching into 2028 look less like a single-quarter demand pulse and more like a build-out schedule.
Insiders have been net sellers over the past 90 days. Retail chatter on the Apple extension stayed muted while the stock rose 11.28% in a week and 45.4% over the past year. Analyst consensus target sits at $523.73, with 44 buy or strong buy ratings and zero sells. I will keep buying Broadcom until Hock Tan stops raising the AI number.
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