<p><strong>Broadcom</strong> <span class="ticker-mention inline-flex items-center font-bold">(AVGO <span class="ml-1 text-green-900">+3.24%</span>)</span> has been on fire in recent years, but those gains have been plagued by volatility. The chipmaker has gained 649% since the start of 2023, but has fallen by 10% or more at least nine times. Moreover, in early 2025, the stock crashed 41%, so ownership requires a long-term focus.</p><p></p><p>Much of the volatility stems from uncertainty about the future adoption of artificial intelligence (AI). Yet seasoned investors will recognize that while AI represents a growing opportunity for Broadcom, its legacy business still has room to run.</p><p></p><p>Indeed, <strong>Apple</strong> <span class="ticker-mention inline-flex items-center font-bold">(AAPL <span class="ml-1 text-green-900">+0.90%</span>)</span> CEO Tim Cook just made an announcement that underscores this point and should be of keen interest to Broadcom shareholders.</p>

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<img alt="The Apple logo superimposed over a hand holding an iPhone, beside the Broadcom logo, over a picture of the lobby at the company's headquarters." width="880" height="587" src="https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-b3A9cmVzaXplJnVybD1odHRwczovL2Nkbi5jb250ZW50LmZvb2xjZG4uY29tL2ltYWdlcy8xdW1uOXFlaC9wcm9kdWN0aW9uL2VhYWIyMWMzNzk3OWJjOWFjZjIxNmQzNzJlOTU1NTUyYzhlY2VhZmQtMTIwMHg4MDAucG5nP3c9MTIwMCZoPTgwMCZxPTc1JmF1dG89Zm9ybWF0Jnc9Mzg0MA?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" original-src="https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-b3A9cmVzaXplJnVybD1odHRwczovL2Nkbi5jb250ZW50LmZvb2xjZG4uY29tL2ltYWdlcy8xdW1uOXFlaC9wcm9kdWN0aW9uL2VhYWIyMWMzNzk3OWJjOWFjZjIxNmQzNzJlOTU1NTUyYzhlY2VhZmQtMTIwMHg4MDAucG5nP3c9MTIwMCZoPTgwMCZxPTc1JmF1dG89Zm9ybWF0Jnc9Mzg0MA"/>
<p style="color: #666">Image source: The Motley Fool. </p>
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</div><h2 id="applex27s-significant-commitment">Apple's significant commitment</h2><p></p><p>In a press release that dropped this week, Apple announced a new multiyear deal with Broadcom. As part of the agreement, Broadcom will help the iPhone maker &#34;design and produce custom silicon components and cutting-edge wireless connectivity technologies for a wide range of Apple products.&#34; The $30 billion deal is expected to result in more than 15 billion chips made in the U.S. and will include a $1.5 billion expansion and modernization in Broadcom's facility in Fort Collins, Colorado.</p><div><div id="foolcom_sidebar_top_mobile_container"><div><div><div></div><div></div><div></div></div></div><div></div></div></div><p></p><p>The components in question support radio signals used by iPhones for 5G data and voice transmission, Wi-Fi, GPS navigation, Bluetooth, and more.</p><div></div><p></p><p>In a filing with the Securities and Exchange Commission (SEC), Broadcom revealed it will help the iPhone maker &#34;develop and supply a range of custom ASIC [application-specific integrated circuits] silicon products for use in multiple generations of Apple products&#34; through 2031.</p><div><div id="in_line_article_pitch_container"><div><div><div><div></div></div><div><div></div><div></div><div></div></div></div></div><div></div></div></div><p></p><p>This shows that AI isn't Broadcom's only opportunity for growth in the coming years.</p><p></p><h2 id="what-the-future-holds">What the future holds</h2><p></p><p>Broadcom's financial results have been impressive, despite ongoing concerns about the future of AI. In its fiscal 2026 second quarter (ended May 3), the company generated <em>record</em> revenue of $22.2 billion, up 48% year over year, driving adjusted earnings per share (EPS) of $2.44, a 54% increase. It's worth noting that AI-related chip revenue accounted for <em>less than half</em> of Broadcom's total revenue.</p><section><div><div><div><small><div>Expand</div></small></div><div><img alt="Broadcom Stock Quote" width="64" height="64" src="https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-b3A9cmVzaXplJnVybD1odHRwczovL2cuZm9vbGNkbi5jb20vYXJ0L2NvbXBhbnlsb2dvcy9tYXJrL0FWR08ucG5nJnc9MTI4?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" original-src="https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-b3A9cmVzaXplJnVybD1odHRwczovL2cuZm9vbGNkbi5jb20vYXJ0L2NvbXBhbnlsb2dvcy9tYXJrL0FWR08ucG5nJnc9MTI4"/></div><div><h2>NASDAQ: AVGO</h2><div>Broadcom</div></div></div><div><div><div>Today's Change</div><div>(3.24%) $12.59</div><div>Current Price</div><div>$401.28</div></div><div></div></div></div><div><div></div><div><h3>Key Data Points</h3><div><div>Market Cap</div><div><span class="inline-flex items-center gap-1">$1.8T<span class="group/market-cap relative inline-flex shrink-0 align-middle"><span></span><span id="_R_26kl5tminr5uamivb_" class="sr-only">Market cap calculated using publicly traded shares outstanding only. Does not include unlisted, private, or dual-class non-traded shares. Implied market cap may vary.</span><span class="pointer-events-none absolute z-50 mt-1 w-64 rounded-md bg-gray-900 px-3 py-2 text-xs leading-snug whitespace-normal! wrap-break-word normal-case! text-gray-50 opacity-0 shadow-lg transition-opacity group-hover/market-cap:opacity-100 group-focus-within/market-cap:opacity-100 top-full right-0 left-auto translate-x-0">Market cap calculated using publicly traded shares outstanding only. Does not include unlisted, private, or dual-class non-traded shares. Implied market cap may vary.</span></span></span></div><div>Day's Range</div><div>$387.95 - $407.51</div><div>52wk Range</div><div>$269.58 - $495.00</div><div>Volume</div><div>1.1M</div><div>Avg Vol</div><div>26.5M</div><div>Gross Margin</div><div>65.66%</div><div>Dividend Yield</div><div>0.65%</div></div></div></div></section><p>Management believes the company's growth will continue to accelerate. For the third quarter, Broadcom is guiding for revenue of $29.4 billion, which would represent an increase of nearly 84%, fueling adjusted EBITDA of $20 billion, up 100%.</p><p></p><p>Broadcom continues to lean into what CEO Hock Tan calls the &#34;insatiable&#34; demand for the company's custom AI chips -- dubbed XPUs. It has signed major chip deals with <strong>Alphabet</strong> and Anthropic, and expanded its relationship with Meta Platforms. The revenue from these deals won't be reflected in Broadcom's financial results until late 2027 or early 2028 -- but taken together, the impact will be significant.</p><p></p><p>To be clear, demand for AI makes up a large chunk of Broadcom's business, but its legacy wireless business took center stage this week, as Apple's $30 billion commitment over the next five years helps illustrate the opportunities that exist outside the AI distortion field. </p><p></p><p>Overall, Wall Street estimates that Broadcom will generate revenue of $106 billion in 2026, and $172 billion in 2027, and $229 billion in 2028, more than doubling its revenue over two years. Yet some believe even those estimates are conservative.</p><p></p><p>Despite the multipronged opportunity, Broadcom stock is selling for less than 21 times next year's expected earnings. Furthermore, when measuring its valuation using the price/earnings-to-growth (PEG) ratio -- which is more effective for valuing high-growth stocks -- it returns a multiple of 0.54, when any number less than 1 indicates an undervalued stock.</p><p></p><p>Taken together, the evidence suggests the runway ahead for Broadcom is long, and the stock is a buy.</p><div id="article_pitch_container"><div><div><div></div><div></div><div></div><div></div><div></div><div></div><div></div></div></div><div></div></div><div id="promobox_container"><div><div><div></div><div></div><div></div><div></div></div></div><div></div></div>

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<p>Apple announced a $30 billion multiyear deal with Broadcom to design and produce custom silicon and wireless connectivity technologies for its products through 2031. This agreement includes manufacturing over 15 billion chips in the U.S. and a $1.5 billion facility expansion in Colorado. The news highlights Broadcom's strong legacy business alongside its AI growth, supporting positive investor sentiment despite recent stock volatility.</p>

- Broadcom has experienced significant volatility, gaining 649% since early 2023 but suffering multiple drops, including a 41% crash in early 2025.  
- A new $30 billion multiyear deal with Apple will boost Broadcom's revenue through custom chip production, despite AI concerns; legacy business remains strong.  
- Broadcom anticipates rapid growth with projected revenues of $106 billion in 2026 and a PEG ratio indicating the stock is undervalued, suggesting a promising future.

Broadcom Stock Investors Just Got Incredible News from Apple CEO Tim Cook