Broadcom Is Still Down 22% in the Past Month: Is AVGO Stock Really on a Road to Recovery?
While rival chipmakers bounce back from the midterm-driven selloff, Broadcom sits frozen despite triple-digit AI growth and a bargain multiple. What does the market see in its customers and margins that the earnings report doesn't?
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The AI chip selloff has dragged Broadcom (NASDAQ:AVGO | AVGO Price Prediction) into a steep one-month decline, and the custom AI chip leader hasn’t joined the latest rebound. Broadcom stock is down 22% over the past month to $292.21 in afternoon trading. Even as most chipmakers rally back, the stock is up just 0.2%.
Politics set the background. AI and chip stocks sold off on November 4 and November 5 after Democrats won control of Congress in the midterm elections, raising fears of tighter rules on data center construction. For Broadcom, which designs custom accelerators for a small group of hyperscalers and AI labs, the open question is whether the stock is set up for a recovery or still has more downside.
Broadcom’s Bull Case Rests on Surging AI Revenue
On September 2, Broadcom reported Q3 FY2026 revenue of $29.6 billion, up 86% year over year (YoY). AI semiconductor revenue at the company reached $16.7 billion, up 221% YoY and 54% sequentially. Looking ahead, Broadcom guided Q4 FY2026 revenue to $34.8 billion and AI semiconductor revenue to $21.7 billion, a 236% YoY jump.
Broadcom CEO Hock Tan told analysts on that call, “Q3 demand was simply hot, and we’re just getting started.” Tan also stated, “In 2027, we have secured the supply to again double AI revenue to approximately $115 billion.” Those comments framed the AI ramp at Broadcom as a multiyear story.
The valuation adds to the bull argument. At 19x forward earnings, Broadcom is valued far below Advanced Micro Devices (NASDAQ:AMD) at 42x, a cheaper way into the same AI budgets. Addressing the political risk, Gavekal U.S. chief economist Will Denyer said, “There will always be some state and some county who is willing to welcome data centers.” That view suggests Broadcom’s customers could move projects to friendlier locations.
Broadcom’s Bear Case Centers on Political Risk and Margins
Custom AI chips from Broadcom go straight into the hyperscale data centers now facing political scrutiny, so a construction slowdown could hit its sales directly. Tan noted that dependency himself on the same call: “To deploy an AI data center at scale, land, power and shell are major constraints and dictate timing.” Those constraints sit largely outside the company’s control, and they also explain why the power, cooling, and networking suppliers behind the expansion keep getting attention of their own (we featured seven of them in a free report on the AI infrastructure trade). Broadcom also reveals that a limited number of significant customers drive its AI semiconductor business.
Analysts expect Broadcom’s earnings per share to grow 67% in fiscal 2027, compared with 110% for AMD, which helps explain the lower multiple. Management’s Q4 outlook calls for gross margin of 73%, down from 78% a year earlier, as memory-heavy custom accelerators take a larger share of Broadcom’s sales. A quiet response to the chip rebound may suggest investors want proof before stepping back in.
How NVIDIA, AMD and Marvell Stack Up Against Broadcom
NVIDIA (NASDAQ:NVDA) stock is down 22% over the past month to $187.43, a slide almost identical to the one at Broadcom. AMD stock is down 31% over the past month to $445.98. The steepest decline of the four has come from Marvell Technology (NASDAQ:MRVL), whose stock is down 52% over the past month to $138.53.
The business models differ more than the price charts suggest. Merchant accelerators from NVIDIA and AMD are sold to any cloud provider, backed by their own software and networking platforms. Broadcom co-designs custom accelerators with individual customers and pairs them with AI networking silicon and VMware-based infrastructure software. Marvell, a custom-chip rival, sits closest to that model by combining custom silicon with optical and switching chips.
Broadcom’s December Report Is the Next Big Test
Broadcom’s next test is whether its December earnings report delivers on its Q4 AI semiconductor guidance. The bullish case rests on triple-digit AI growth, a far lower forward multiple than AMD and customers that can shift data centers to friendlier states. On the other side sit political risk aimed directly at Broadcom’s customers, slower expected earnings growth and contracting gross margin.
Whether the past month’s slide marks a bottom or a pause for Broadcom remains an open call for each reader. A cautious approach could make sense until the debate over Broadcom’s AI guidance resolves.
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David Moadel is financial writer specializing in stocks, ETFs, options, precious metals, and Bitcoin. David has written well over 1,000 articles for leading online publications, helping investors understand markets, income strategies, and risk.His work has appeared in The Motley Fool, InvestorPlace, U.S. News & World Report, TipRanks, ValueWalk, Benzinga, Market Realist, TalkMarkets, Finmasters, 24/7 Wall St., and others.With a master’s degree in education, David has taught at the elementary, high school, and college levels. That teaching background shapes his writing style: clear, educational, and practical. David has also built a loyal social-media audience by providing trustworthy financial content on YouTube, X/Twitter, and StockTwits.
