Broadcom Stock on the Edge: 3 Threats You Need to Know

Broadcom (AVGO) has stumbled before. It’s stock plunged > 30% in span of less than 2 months 2 times in multiple years, wiping out billions in market value, and erasing massive gains in single correction. If history is any guide, Broadcom (AVGO) stock isn’t immune to sudden, sharp downturns.

The Risk That Is Brewing

• VMware Churn Risk: Infrastructure Software revenue was $6.8B in Q3 2025. Customer churn is evident as Nutanix gained over 2,700 customers in FY2025 due to Broadcom’s VMware pricing.
• AI Client Concentration: Q3 2025 AI semiconductor revenue reached $5.2B, but 40-50% depends on a small number of hyperscale customers, posing risk if a major client shifts in-house.
• Geopolitical Headwinds: Broadcom’s 20-36% revenue exposure to China risks US-China trade tensions, tariffs up to 39% by 2025, and export controls.

Single stock can be risky, but there is a huge value to a broader diversified approach we take with Trefis High Quality Portfolio. We go beyond just equities. Is a portfolio of 10% commodities, 10% gold, and 2% crypto in addition to equities and bonds – likely to return more during the next 1-3 years, and protect you better if markets crash 20%? We have crunched the numbers.

Is Risk Showing Up In Financials Yet?

It certainly helps mitigate the risk if the fundamentals check out. For details on AVGO Read Buy or Sell AVGO Stock. Below are a few numbers that matter.

• Revenue Growth: 28.0% LTM and 24.0% last 3-year average.
• Cash Generation: Nearly 41.6% free cash flow margin and 39.0% operating margin LTM.
• Valuation: Broadcom stock trades at a P/E multiple of 84.7
• Opportunity vs S&P: Compared to S&P, you get higher valuation, higher revenue growth, and better margins

*LTM: Last Twelve Months

How Bad Can It Really Get?

When looking at risk, it’s useful to see how AVGO holds up during big market sell-offs. In 2018, the stock dropped about 27% from peak to trough. The Covid pandemic hit it harder, with a nearly 48% plunge. During the inflation shock, the dip was around 35%. Even with strong fundamentals, AVGO isn’t immune to sharp declines when the broader market turns south. Good quality can cushion the fall, but downturns still sting.

But the risk is not limited to major market crashes. Stocks fall even when markets are good – think events like earnings, business updates, and outlook changes. Read AVGO Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.

The Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.