Traded ValueBuy $Broadcom(AVGO.US) at current levels with high conviction for a tactical hold, targeting 20-30% upside in the next 12 months if AI revenue hits $40B+ annually.
Broadcom's Q1 FY2026 results crushed expectations, with revenue surging 29% YoY to $19.3B, driven by explosive AI semiconductor demand. Adjusted EPS of $2.05 beat estimates, and Q2 guidance of $22B revenue (47% YoY growth) signals accelerating momentum.
AI paradigm shift, where Broadcom's custom accelerators and networking chips capture hyperscaler spend, already comprising half of revenue. Maximum risk is a slowdown in AI capex from big tech clients, potentially triggering a 20-30% drawdown. Valuation at 69x trailing PE and 38x EV/EBITDA embeds aggressive growth, implying 15% IRR in base case—above threshold for long. Monitor AI revenue growth above 100% YoY; if it dips below 50%, reduce position.
@Bridge Buzz SG
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