Broadcom Drops 11% Year to Date: Should You Buy the Stock on the Dip?

Broadcom AVGO shares have dropped 10.5% in the year-to-date period, outperforming the broader Zacks Computer and Technology sector’s fall of 11.5%, but underperforming the Zacks Electronics – Semiconductors industry’s decline of 5.5%. Although AVGO shares have been benefiting from rising AI revenues driven by strong demand for custom AI accelerators (XPUs), the lower margin chips are hurting the revenue mix. The sluggish non-AI revenue view for the second quarter of fiscal 2026 is a headwind for investors.

So, what should investors do with the AVGO stock? Let’s find out.

AVGO’s Gross Margin View Unimpressive

Broadcom’s gross margin has contracted sequentially in the trailing four quarters. In the first quarter of fiscal 2026, the company reported a gross margin of 77% compared with 77.9% reported in the fourth quarter of fiscal 2025, 78.4% reported in the third quarter of fiscal 2025, and 79.4% posted in the second quarter of fiscal 2025. On a year-over-year basis, the…