Broadcom Nearing 52-Week High: Buy, Sell or Hold?

Broadcom is testing resistance around $421.86 as shares press near a 52-week high of $442.36 with earnings days away. The company designs custom AI accelerators, networking silicon, and infrastructure software for major hyperscalers, with VMware supporting the software business. AI semiconductor revenue reached $8.40 billion in Q1 FY2026, up 106% year over year, and Q2 AI revenue guidance is $10.7 billion. Total Q2 revenue is guided near $22 billion, up 47% year over year, with record adjusted EBITDA margin and strong free cash flow. Valuation is elevated at 82 trailing earnings and 37 forward earnings, with EV/EBITDA near 54, limiting tolerance for any slowdown. Insider selling and customer concentration add risk, while management cites visibility into AI chip revenue through 2027 and capacity locked through 2028.

"AI semiconductor revenue hit $8.40 billion in Q1 FY2026, up 106% year over year, and management guided Q2 AI revenue to $10.7 billion. Total Q2 revenue is guided to roughly $22 billion, up 47% year over year. Polymarket traders assign a 94.4% probability that Broadcom beats next week."

"Q1 adjusted EBITDA margin hit a record 68%, free cash flow ran at 41% of revenue, and the company authorized a $10 billion buyback through December 31, 2026. Tan reiterated visibility to "in excess of $100 billion" in AI chip revenue in 2027, with capacity locked in through 2028."

"Shares trade at 82 trailing earnings and 37 forward earnings, with an EV/EBITDA near 54. That leaves no room for a soft quarter, a hyperscaler capex pause, or slippage in the OpenAI, Anthropic, Google, or Meta XPU roadmaps that Tan has staked the thesis on."

"Director Henry Samueli disposed of more than one million shares in late March, and CEO Hock Tan sold 22,000 shares on April 8. The CFO, both segment presidents, and the chief legal officer also unloaded stock in the $317 to $370 range. Customer concentration remains acute, with six strategic XPU customers driving the AI narrative."

Read at 24/7 Wall St.