Broadcom finds itself caught between two powerful narratives: an explosive surge in custom AI chip demand that is reshaping its revenue trajectory, and a deepening antitrust standoff in Europe that threatens one of its major software businesses. The tension has left the stock oscillating near historic highs while investors weigh the balance of forces.
The clearest evidence of Broadcom’s AI momentum comes from its role as Google’s primary ASIC partner. Morgan Stanley forecasts 3.2 million Tensor Processing Unit shipments this year, climbing to 5 million in 2027. The partnership, extended in April through 2031, provides a multiyear revenue floor. Meanwhile, Anthropic is expected to consume 3.5 gigawatts of TPU compute power from next year, driving demand for Broadcom’s SerDes, power management, and advanced packaging technologies. The company’s second-quarter AI semiconductor revenue surged 143% year-on-year to $10.8 billion, propelling total quarterly sales to $22.19 billion — up 47.9%. Management has guided for $29.4 billion in Q3 revenue, with AI chips alone contributing $16 billion, a 200% jump.
The broader semiconductor cycle is providing tailwinds. ASML raised its 2026 revenue forecast to €43-45 billion from €36-40 billion, a move analysts interpret as a precursor to increased investment in high-performance networking and ASICs — areas where Broadcom commands strong market share. Yet sentiment remains fractured. Bank of America’s latest fund manager survey found 82% of participants regard “Long Semiconductors” as the most crowded trade, underscoring the valuation anxiety that shadows the sector.
Against this backdrop, five European cloud associations — led by CISPE — escalated their fight against Broadcom’s VMware strategy. On July 10, they sent a joint letter to EU Competition Commissioner Teresa Ribera and Tech Commissioner Henna Virkkunen, calling for interim measures. The groups allege that Broadcom has imposed steep price hikes and restrictive licensing changes since acquiring VMware in 2023, and that its January 2026 decision to terminate most VMware partnerships with European cloud providers effectively locks competitors out. They demand a minimum three-year transition period while the Commission investigates. Broadcom dismisses the claims as a distortion of market realities.
Should investors sell immediately? Or is it worth buying Broadcom?
The regulatory pressure comes as Broadcom addresses technical vulnerabilities in the VMware ecosystem. On July 14, the company patched seven flaws in the Avi Load Balancer, including a critical authentication bypass (CVE-2026-47865) and several bugs that could allow code execution by attackers with network or local access. A separate seven-hour maintenance window for the Cloud SWG Portal and Symantec Enterprise Cloud Platform Console is scheduled for July 16.
The stock’s price action reflects the competing narratives. Shares recently changed hands around €344.55, off roughly 20% from the 52-week high of €429.60 set on June 3. The decline from that peak has been orderly, and the monthly gain of 6.13% and year-to-date advance of 16.15% underscore the underlying demand for AI exposure. The 30-day volatility of nearly 50% and a neutral RSI of 52.4 suggest the market is waiting for a catalyst — either a resolution to the EU dispute or another blockbuster earnings report.
What may ultimately tilt the balance is the newly confirmed multiyear agreement with Apple. Valued at an estimated $30 billion-plus, the pact covers custom silicon and wireless connectivity components. Broadcom is investing $1.5 billion to modernize its Fort Collins, Colorado, facility to produce over $15 billion in U.S.-manufactured chips. For long-term investors, that deal — along with the TPU pipeline — likely carries far more weight than the European cloud conflict, a procedural battle that currently has no fixed end date.
Ad
Broadcom Stock: Buy or Sell?! New Broadcom Analysis from July 16 delivers the answer:
The latest Broadcom figures speak for themselves: Urgent action needed for Broadcom investors. Is it worth buying or should you sell? Find out what to do now in the current free analysis from July 16.
Broadcom: Buy or sell? Read more here...
