By Trefis Team
Publication Date: 2026-06-11 00:16:00
While Wall Street obsesses over AI chip sales, a different, high-margin business is providing the stability that could answer the biggest risk.
If you follow Broadcom (AVGO), you know the story is about artificial intelligence. The numbers are almost hard to comprehend, with AI semiconductor revenue growing and bookings that give the company visibility years into the future. After its 60.1% run over the last year, it’s clear the market has priced in a lot of that success.
But that growth comes with a catch: margin pressure. As the mix of revenue shifts toward custom AI chips, which carry lower gross margins, the company’s profitability may erode. This is where you need to look past the headlines to a different part of the business and to one number that reframes the entire risk-reward equation.
A High-Margin Foundation
The metric that matters is the 17% year-over-year growth in annual recurring revenue, or ARR, from its
