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Profile

Broadcom (AVGO) is one of the world’s leading semiconductor and infrastructure software companies, with dominant positions across custom AI accelerators, networking chips, wireless components, and mainframe software. The company benefits from deep integration with hyperscalers, telecom operators, and enterprise customers. Broadcom’s portfolio spans high-margin chipsets, mission-critical infrastructure software, and recently expanded cloud and virtualization capabilities through VMware. Its combination of scale, recurring software revenue, and exposure to surging AI accelerator demand reinforces one of the most durable competitive moats in the industry.

DCF Analysis

Inputs:

Discount Rate: 10%
Terminal Growth Rate: 3%
WACC: 10%

Forecasted Free Cash Flows (in billions USD)

2025: $28.0 → PV: $25.5
2026: $30.0 → PV: $25.8
2027: $32.0 → PV: $26.1
2028: $34.0 → PV: $26.4
2029: $36.0 → PV: $26.7

Total Present Value of FCFs = $130.5B

Terminal Value Calculation

Using perpetuity growth model with 2029 FCF = $36B:

TV = (36 × 1.03) ÷ (0.10 − 0.03) = $529.7B
Present Value of Terminal Value = $368.2B

Enterprise Value

Enterprise Value = 130.5B + 368.2B = $498.7B

Net Debt

Cash & Equivalents: $10.718B
Total Debt: $64.229B
Net Debt = $53.51B

Equity Value & Per-Share Value

Equity Value = 498.7B – 53.51B = $445.2B
Shares Outstanding: ~4.70B
Intrinsic Value per Share ≈ $95

Conclusion

DCF Value: $95
Current Price: ~$406
Margin of Safety: –76%

Broadcom remains a global semiconductor and software powerhouse with enormous exposure to AI infrastructure, mission-critical enterprise applications, and long-duration customer contracts. Yet under conservative DCF assumptions, AVGO trades materially above intrinsic value—suggesting the market continues to price Broadcom as a high-growth AI beneficiary with expanding margins, deep customer lock-in, and robust free cash flow generation.

For long-term investors, Broadcom represents exceptional scale, diversification, and cash-flow durability. But at current prices, the stock offers limited margin of safety even as the business remains one of the strongest and most reliable generators of free cash flow in the semiconductor industry.

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