Broadcom is executing a delicate high-wire act. On one side sits a freshly sealed, multi-billion-dollar chip supply pact with Apple that runs through 2031, providing a floor of predictable revenue for years. On the other, the company is sprinting to capture the exploding market for custom artificial intelligence silicon, a business that its own management expects to swell from $20 billion last year to more than $100 billion by fiscal 2027. The stock has responded with a 7.38% weekly gain to close at €350.00 on Friday, but remains 18.53% below its 52-week high of €429.60 — a gap that analysts increasingly see as a buying opportunity.
The Apple agreement is the headline act. With a value exceeding $30 billion, it commits the iPhone maker to sourcing Broadcom’s FBAR filters and radio-frequency chips — application-specific integrated circuits (ASICs) designed and manufactured in Fort Collins, Colorado, where Broadcom is pouring an additional $1.5 billion into capacity expansion. The investment will enable production of more than 15 billion chips on U.S. soil, plugging neatly into Apple’s American Manufacturing Program. Apple already accounts for roughly 20% of Broadcom’s annual revenue, and the long-term extension significantly reduces a concentration risk that has long nagged investors.
Yet the Apple deal is only half the story. Broadcom’s custom-chip pipeline for hyperscale cloud and AI customers is filling fast. Together with OpenAI, the company unveiled “Jalapeño,” an inference chip that promises to halve the cost of running large language models compared with conventional GPUs — a road map that stretches to 2029. Separately, production of Meta’s next-generation MTIA chip, codenamed “Iris,” is slated to begin in September 2026. And Apple itself is jointly developing a new AI server chip called “Baltra” that should enter mass production later that same year. The collective order backlog has ballooned to $200 billion, stretching through fiscal 2027.
The financials support the bullish narrative. Broadcom’s second fiscal quarter of 2026 delivered revenue of $22.19 billion, up 47.9% year over year, with earnings per share of $2.44 marginally ahead of consensus estimates. For the third quarter, management has guided for approximately $16 billion in AI semiconductor revenue — more than triple the year-ago figure. The company’s networking division adds another tailwind: the Tomahawk 6 switch, capable of 100 terabits per second, is due to start shipping in the third quarter of 2026, targeting the massive interconnects required by AI clusters.
Should investors sell immediately? Or is it worth buying Broadcom?
The stock’s technical picture reflects a recovery that still has room to run. After climbing 8.63% over the past 30 days and 17.98% year to date, Broadcom now trades almost exactly on its 50-day moving average of €350.75. The relative strength index sits at 55, signaling neutral momentum after the recent rally. The 200-day average of €312.69, however, lies nearly 12% below the current price — a reminder of how far the shares have rebounded from the June sell-off that followed the record high. At a forward PEG ratio of roughly 0.4 on a five-year basis, the valuation remains undemanding given the growth trajectory, even as management warns of a slight gross margin compression to 74% as AI revenue accounts for a larger share of the mix.
Insider activity has introduced a cautionary note. SEC filings show that director Gayla Delly and chief legal officer Mark Brazeal sold shares early this week. Brazeal disposed of 25,000 shares on July 8 at a weighted average price of around $379. Such sales are often routine, but they add a layer of scrutiny to a stock that already carries a rich absolute price tag. Several analysts have nonetheless lifted their price targets to a range of $500 to $523 following the Apple announcement, betting that the dual engines of iPhone chip demand and AI custom silicon will keep Broadcom’s earnings compounding at a double-digit clip.
The next catalyst to watch is the September production start of Meta’s Iris chips. If that ramp proceeds on schedule, and the networking upgrade cycle gains momentum alongside it, Broadcom’s $100 billion AI revenue ambition for 2027 will look increasingly attainable. For now, the combination of a locked-in Apple contract and a full pipeline of bespoke AI designs gives the chipmaker a rare degree of earnings visibility — and a stock that may yet close the gap to its all-time high.
Ad
Broadcom Stock: Buy or Sell?! New Broadcom Analysis from July 11 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 11.
Broadcom: Buy or sell? Read more here...
