$Broadcom(AVGO.US)

Post 1 Episode 24

Context: What stands out to me about Broadcom today is not simply how fast its AI business is growing, but the quality of that growth. Q3 AI semiconductor revenue reached $16.7 billion, up 221% YoY, and management expects it to accelerate to $21.7 billion in Q4. At the same time, Broadcom generated $13.7 billion of free cash flow in a single quarter — equivalent to 46% of revenue.

My trade: That makes me view Broadcom differently from many AI beneficiaries. It is not merely spending heavily today in the hope of monetising AI years from now. Custom accelerators and networking are already scaling rapidly while the broader business continues to throw off substantial cash. Broadcom now expects total Q4 revenue of about $34.8 billion, up 93% YoY.

Takeaway: In a market full of AI promises, I increasingly value companies where the theme is already visible in the cash register. Broadcom isn’t just participating in the AI capex boom — it is converting that demand into enormous free cash flow. That makes the story much more than simply another AI trade.

@Captain's Treasure