Broadcom stock: AI euphoria keeps the rally alive, but how stretched is the valuation?

Broadcom’s stock has ripped higher on AI and VMware integration hopes, brushing against record territory while volatility stays elevated. Investors now need to weigh blistering one?year gains against lofty expectations for chips, software and free?cash?flow growth.

Broadcom stock has been trading like a coiled spring, swinging sharply as investors reprice just how big its AI and infrastructure opportunity could be. After a choppy five?day stretch with wide intraday ranges, the share price is still hovering not far from its recent peak, leaving sentiment firmly bullish but increasingly nervous about how much upside is already in the chart.

One-Year Investment Performance

An investor who had bought Broadcom stock roughly one year ago and simply held on would now be sitting on an outsized gain. With the share price up by around 70 to 80 percent over that period, a hypothetical 10,000 dollars position would have grown to roughly 17,000 to 18,000 dollars, turning patience and conviction in AI infrastructure into a windfall that easily outpaced the broader market.

The path, however, has been anything but smooth. The stock has repeatedly pulled back 10 to 15 percent from local highs as traders locked in profits and questioned whether AI orders can sustain such a steep trajectory. Each dip so far has been met by fresh buying, reinforcing the sense that Broadcom has become a core way to express a long?term bet on data center spending and custom accelerators.

Recent Catalysts and News

Earlier in the current week, Broadcom grabbed headlines after its latest earnings report highlighted explosive growth from AI?related networking and custom chip demand, even as some legacy segments looked flatter. Revenue and adjusted earnings once again topped Wall Street forecasts, and management leaned into a stronger outlook for AI infrastructure, which helped the stock recover from early selling and finish the session with a solid gain.

In the days that followed, analysts and investors also focused on the ongoing integration of VMware, which Broadcom acquired to pivot further into high?margin infrastructure software. Commentary from management about streamlining the VMware portfolio, focusing on large enterprise customers and driving recurring subscription revenue has been a key narrative driver, reassuring the market that software will become a second powerful profit pillar alongside semiconductors.

More recently, trading volumes have stayed elevated as AI peers moved on new product launches and cloud providers reiterated aggressive capex plans. That spillover enthusiasm has kept Broadcom in the spotlight, with the stock reacting swiftly to any hint that hyperscalers are expanding their AI networking and accelerator orders.

Wall Street Verdict & Price Targets

Wall Street remains broadly positive on Broadcom stock, with a clear tilt toward Buy recommendations. Firms such as Goldman Sachs and Bank of America have reiterated bullish views in recent weeks, citing the company’s leverage to AI networking, custom accelerators and high?margin software. Several major houses, including J.P. Morgan and Morgan Stanley, continue to see upside in their price targets compared with the current quote, even after the powerful run, though they have warned that short?term pullbacks are likely given how crowded the AI trade has become.

Consensus still points to Broadcom as a core long?term holding rather than a tactical trade, with most analysts expecting earnings and free cash flow to compound at a double?digit clip. The main divide on the Street is not about the direction, but about how quickly AI demand can scale from here and whether the current valuation already reflects the bulk of that growth.

Future Prospects and Strategy

Broadcom’s business model now rests on two strong legs: a franchise semiconductor portfolio that powers networking, storage and custom silicon for hyperscale data centers, and a growing infrastructure software platform built around VMware and other assets. Over the coming months, performance will hinge on whether AI orders from cloud giants stay robust, how smoothly the VMware integration proceeds and whether management can keep margins and cash generation near historic highs while digesting a large acquisition.

If hyperscalers maintain their aggressive data center build?out and Broadcom executes on its software subscription strategy, the company is well positioned to defend its premium valuation. On the flip side, any hint of AI capex fatigue or integration hiccups at VMware could trigger a sharper correction, especially with the stock trading near its 52?week high and far above last year’s lows. For now, the balance of evidence still favors the bulls, but entry timing and risk tolerance matter more than ever.