Broadcom Stock Jumps Nearly 3.2% as $16.7 Billion AI Engine Faces Margin Test

This article first appeared on GuruFocus.

Broadcom (NASDAQ:AVGO), the custom chip and networking giant, caught a lift as JPMorgan argued the AI trade could recover from its recent pullback. Shares rose nearly 3.2% to $360.53 at roughly 11:14 a.m. ET Tuesday, a sharper move than the nearly flat opening suggested.

The numbers behind that optimism are hard to ignore. Broadcom reported $16.7 billion in fiscal third-quarter AI semiconductor revenue, up 221% from a year earlier and 54% from the prior quarter. Custom accelerators and networking are now doing serious work for the business, and management expects AI chip revenue to reach $21.7 billion in the fourth quarter.

The valuation picture adds a wrinkle: GuruFocus puts GF Value at $414.97, leaving the $360.53 share price 13.12% below that estimate. That gap looks…