Buy, Sell Or Hold Broadcom Stock At $332?
More on the AI trade: our AI storyline page collects our pieces on AI stocks.
Pick up your phone and ask Google something. Broadcom chips sit all along the way: in phones’ radio parts, in the broadband gear that carries the signal and in the data centers that answer. The AI answer at the top of your search likely ran on a Google TPU, a chip Broadcom helps build. Anthropic, the company behind Claude, has signed up for several gigawatts more of those chips from 2027.
That’s why analysts expect Broadcom’s sales to rise 64% in the fiscal year ending November 2027, to about $174 billion, after an expected 66% rise in the fiscal year that just ended. Yet at Tuesday’s close of $332 investors paid 17.6 times sales, against 30.1 times on June 2, a 41% cut. Growth holding near 65%, multiple down about 40%. Holders lost almost a third: the stock closed Tuesday 31% below its June high, even after jumping 8.8% on Monday and 3.9% on Tuesday.
Those losses already tested your money. In a portfolio of a few million dollars, Broadcom sits in index funds several times over. Would your plan survive 2022’s 35% fall again? A Trefis partner firm can run it in a free 15-minute call.
What Does Everyone Know?
The orders are real. Broadcom’s sales rose 86% last quarter to $29.6 billion, and AI chip sales tripled to $16.7 billion. It guided to $34.8 billion for the quarter that just ended. CEO Hock Tan has talked of $230 billion a year in AI chip sales by fiscal 2028.
| Sales growth | Broadcom |
|---|---|
| 3 fiscal years to 2025, average | +24% |
| Fiscal 2026 vs fiscal 2025 (expected; Q4 not yet reported) | +66% |
| Fiscal 2027 vs fiscal 2026 (expected) | +64% |
What Does The Data Say?
| Date | Price | Price-to-sales |
|---|---|---|
| Jun 2 (peak) | about $480 | 30.1x |
| Nov 6 | about $294 | 15.6x |
| Nov 10 | $332 | 17.6x |
Three things changed the price of each dollar, not the number of dollars.
The new dollars earn less. Custom AI chips carry lower margins than Broadcom’s software and older chips. In June, right after the peak, Broadcom said gross margin would slip from 77% to about 74%.
A few buyers, and who pays. Google, OpenAI and Anthropic drive the growth. In May, The Information said OpenAI’s chip deal had hit an $18 billion financing snag. In October, Anthropic’s IPO filing showed Broadcom will lend it up to $42 billion to lease its chips. Later that month, Tan said capital, not chips, may be AI’s biggest constraint.
Google added another supplier. In August it signed Marvell for custom chips around its TPUs.
| Stock | P/S Nov 10 (peak) | Cut | Growth expected |
|---|---|---|---|
| Broadcom | 17.6x (30.1x) | −41% | +64% |
| Marvell | 14.0x (31.3x) | −55% | +62% |
| Nvidia | 13.6x (24.7x) | −45% | +69% |
| AMD | 18.4x (24.8x) | −26% | +83% |
Through Friday the two custom-chip makers were cut the most; Nvidia’s drops on Monday and Tuesday have since put it past Broadcom. Our reading: investors aren’t doubting the orders. They’re pricing who pays for them.
What Should You Do This Week?
Position, not prediction. Size Broadcom, counting what your index funds hold, so that 2022’s 35% fall wouldn’t force a sale. Name the price you’d add at: about $290, near Friday’s 15.6x. That replaces the reactive move: chasing Monday’s 8.8% jump, or selling on the next chip headline. Watch Broadcom’s report, due December 9: the 2027 AI sales outlook, the margin, and any word on customer financing.
What’s The Bigger Idea?
When a seller lends its customer the money, its stock starts to trade on the customer’s credit. Anthropic, on course to be Broadcom’s largest compute customer in 2027, is expected to list later this month. A strong IPO lets Anthropic pay its own way. A weak one leaves Broadcom as the lender. The principle: sell the thesis, not the price. The price fell; the order book didn’t.
A good plan works on bad days too. – Anonymous
What Should You Ask Next?
- Applied Materials stock at $371: why is it half price? The same anomaly, one step up the supply chain.
- Which big stocks expect faster growth but got cheaper this year?
- How much Nvidia do you really own? The same count works for Broadcom.
We’ll follow this story through Anthropic’s listing and Broadcom’s December report.
AI orders, IPOs and inflation reports change the odds, not your plan. If you have $1 million or more invested, get a second opinion on your chip exposure in a free 15-minute call with a Trefis partner firm.
For questions about this article or underlying research, email help@trefis.com.