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Broadcom (AVGO) Stock Forecast 2025: The $1 Trillion AI‑Networking Beast Driving Data‑Center Gold Rush
Broadcom (AVGO) rockets past $1.2 T market cap in 2025. Explore its AI‑networking chips, VMware pivot, 10‑for‑1 split, dividend play & stock‑price outlook.
Quick‑Look Stats – June 29 2025
- Market Cap: ≈ $1.26 trillion
- Share Price Today: $269‑270 (post 10‑for‑1 split)
- Q2 FY‑25 Revenue: $15.0 billion (+20 % YoY)
- Free Cash Flow (Q2): $6.4 billion (+44 % YoY)
- Dividend Yield: ~0.8 % (quarterly payout $0.50)
(All figures current as of June 29 2025.)
Why Broadcom Is Suddenly Everywhere
Nvidia may dominate GPUs, but Broadcom owns the network—the Ethernet switches, custom ASICs, and interconnects that let thousands of GPUs talk to each other in real time. Every time a hyperscaler builds a gigantic AI cluster, Broadcom’s silicon is at the party—and charging cover.
Key Product Catalysts
| Product | What It Does | 2025 Milestone |
|---|---|---|
| Tomahawk 6 | 102.4 Tbps Ethernet switch | Began volume shipments 3 June 2025, enabling 800 Gbit/s fabrics |
| Jericho3‑AI | Deep‑buffer switch ASIC | Scales up to 32,000 GPUs in one lossless mesh |
| Custom AI Accelerators | Cloud‑specific silicon | Two new hyperscaler wins add $5 B+ annual run‑rate by 2026 |
Takeaway: Broadcom isn’t fighting the GPU war—it’s selling the roads, bridges, and tollbooths that every AI player pays to use.
The VMware Gambit: From Chips to Recurring Software Cash
Broadcom closed its $61 billion VMware deal in late 2023. After a year‑plus of tough love—price hikes, product bundling, and ruthless head‑count cuts—VMware is now a subscription machine with 85 % gross margins and growing cross‑sell opportunities for Broadcom’s NICs, storage controllers, and security IP.
Why It Matters for Investors
- Sticky ARR: Enterprise IT teams can’t just rip out VMware without a forklift redesign.
- Margin Expansion: Software pulls consolidated EBITDA margin above 66 %.
- Cash Machine: Subscription cash flow bankrolls dividends and chip R&D.
Earnings Pulse: Record Q2 FY‑25 Sets the Pace
| Metric | Q2 FY‑25 | YoY Change |
|---|---|---|
| Revenue | $15.0 B | +20 % |
| Adjusted EBITDA | $10.0 B | +35 % |
| AI Semiconductor Sales | $4.4 B | +46 % |
| Free Cash Flow | $6.4 B | +44 % |
Management Outlook: Q3 guide calls for $15.8 billion revenue and EBITDA margin “≥ 66 %,” driven by ramping AI network demand and VMware upsells.
10‑for‑1 Stock Split: More Than Just Optics
Broadcom’s July 2024 split chopped its sticker price from ~$1,700 to ~$170, instantly enlarging the options market and opening the door to Dow Jones inclusion (price‑weighted index loves ~$200 names). Retail participation has soared; the share price has since tacked on another ~50 %.
Investor Perks
- Liquidity: Tighter bid‑ask spreads, heavier options volume.
- Index Flow: More passive‑fund demand if the Dow committee bites.
- Psychology: Sub‑$300 stocks feel cheaper—never underestimate human emotion in markets.
Bull vs. Bear: What Could Shock the Story
🐂 Bullish Tailwinds
- AI Fabric Super‑Cycle: Ethernet wins over InfiniBand in data centers.
- Custom Cloud Chips: Captive, high‑margin design wins lock in multi‑year revenue streams.
- VMware Integration: Bundled pricing drives upsell; 85 %+ software gross margin.
🐻 Risk Factors
- High Expectations: At 35× forward P/E, even a tiny miss hurts.
- Regulatory Heat: VMware price hikes (some customers report 3‑digit increases) could draw antitrust scrutiny.
- Macro/Tariffs: A 2025 resurgence of U.S.–China tech tariffs already clipped chipmaker multiples by ~27 % during the March pullback.
Technical Snapshot (Educational Only)
| Indicator | Reading | Implication |
|---|---|---|
| RSI (14‑day) | 68 | Near overbought, but still room to run |
| Support | $240 (20‑day EMA) | First level dip‑buyers eye |
| Resistance | $275‑280 | Channel top after recent ATH |
Bottom Line
Broadcom is no longer “just” a chipmaker—it’s an AI‑networking tollbooth + sticky software vendor + cash‑return machine. With Tomahawk 6 and Jericho3‑AI shipping, and VMware subscriptions piling up, the company looks positioned to keep printing free cash flow even if GPU demand cools. That said, the stock’s sky‑high expectations leave little margin for error. Traders may prefer to wait for dips toward the $240 support band, while long‑term investors focused on AI‑infrastructure might view any pullback as a gift.
1 Is Broadcom still a buy above $1 T market cap?
If you believe the AI build‑out is a decade‑long capex wave and Broadcom retains its Ethernet and custom‑ASIC lead, a high‑30s P/E can be justified by a 15‑20 % EPS CAGR.
2 Does Broadcom make GPUs?
No. It makes networking switches, SerDes, custom accelerators, and infrastructure software—the plumbing that GPUs rely on.
3 How much did VMware really raise prices?
Analyst snapshots show effective increases of 100‑175 % for many customers due to bundling and end‑of‑life for perpetual licenses.
4 When is the next dividend?
Record date is expected mid‑August 2025; payout early September.
5 What could derail the rally?
A sharp drop in hyperscaler capex, a regulatory rollback of VMware pricing, or a severe macro slowdown hitting enterprise IT budgets.
