Broadcom’s soaring stock is getting cheaper. Here’s the math on how that’s possible
Another Broadcom earning report is another breathtaking stock response in response. The AI chip manufacturer’s shares rise almost 11% on Friday and send the stock to the highest level of all time and put the market value to the north of $ 1.5 trillion. Monster Move evokes what we see from Broadcom in December when the shares flew 24% in a single session on a single session upon the strong gains of shares and CEO Hock Tan’s extra sweet conference meeting. A similar situation reappears on Friday. Yes, Broadcom’s Mali 2025 third quarter results were strong, but adding fuel to progress is an equally powerful guide for the ongoing quarter and Tan’s extraordinary optimistic updates in the call. Together, despite all the circles about an artificial intelligence spending balloon, it is clear that we have not yet seen the summit in the AI demand when it comes to real curious players in the field. Broadcom’s conference meeting is really the main fuel for Friday rally. Indeed, when the results first fell after the closing bell, stock saw a modest movement. Shortly after going to Call 17:00 ET, the rise fireworks would begin. The first announced that Broadcom has secured a fourth customer for special AI chips, which he calls XPUs. The alphabet of three existing customers, club name meta platforms and Tiktok parental will be believed. This new one is thought to be the Chatgpt Creator Openai. Tanı said: “As we have already mentioned, we work with other expectations in its AI Accelerators. In the last quarter, one of these expectations released the production orders to Broadcom. And accordingly, we described them as a qualified customer for XPUs. In fact, we have secured more than 10 billion dollars for our XPUs.” That was. From where? Because it was a surprise on the market, and the surprise means that analysts were not included in financial projections. In other words, he estimates that the estimation of 2026 earnings is trying to determine that a true value is very low for Broadcom’s shares. And if the EPS estimation was too low, the numerous price that everyone used to value the stock was lower than we all thought. A stock rally based on information like this is with legs, because it means that investors can pay a higher price for stocks – without paying in terms of valuation. Imagine: Entering the pressure on Thursday night is $ 8.22 per share for Broadcom’s 2026 financial year. On Thursday, the stock at the closing price of about $ 306 was traded on 37.2 times the estimation of 2026. As of Friday morning, the estimated estimate rose to $ 8.92 per share, which rose to estimates 26 financial years. This means that even in the roughly 11% fluctuation of the stock, it is barely more expensive on the basis of the price earnings. Using the $ 335 intraday price, the stock is traded only 37.5 times the new FY2026 estimation. This is a almost insignificant difference to the closing of Thursday, especially investors are thought to be willing to assign a higher amount of more to companies that accelerate their growth rates. We saw the same dynamic Playout in 2023 with the other club name and AI chip manufacturer Nvidia. Stocks increased higher, but Wall Street’s earnings estimates were also moving equally fast. Moreover, the new FY26 earning estimate for Broadcom is probably very low – based on the mechanics of how financial data systems work. It takes time for analysts to come up with updated estimates to enter and see. For example, during this article, our screen showed that Melius Research, a company that justifies on the stock, had an $ 8.48 FY2026 earning estimation per share. However, we know that Melius Research modeling EPS of $ 9.71 for the next financial year from Melius Research’s note to customers on Friday. The issue is that, as these new estimates work in the systems of data providers, we see that the Wall Street consensus has increased even more in the coming weeks and the stock will look cheaper. In fact, when we calculate the P/E ratio using the estimates added only to the Factset system, it already looks cheaper. Avgo 1y Mountain Broadcom’s stock performance in the last 12 months. Now imagine that Tan says that the demand for investors is not only continuing, but also a steam. Knowing this, it is easy to conclude that analysts should continue to update their financial models with more optimistic predictions, as analysts are currently thinking about the demand profile with a fourth largest customer in the picture. We understand for those with a little skeptical about the upper revisions and Broadcom’s ability to meet new goals. As a result, Wall Street tends to overcome both in the beginning and in negativity. In this case, our diagnosis will be what Tan says about Broadcom’s accumulation: now over $ 110 billion. Goldman Sachs analysts wrote to customers with a note. Perhaps not surprisingly, Goldman was among the companies that significantly increased its forecasts significantly for 26 financial years and the next financial year. He went to $ 9.95 ($ 8.81) and $ 12.10 ($ 10.54), respectively. The other conference meeting, which helps the advance of Friday and given to the street conviction to raise the numbers, is that he agrees to walk around for at least 2030. Tan is the man with a plan. He has transformed Broadcom into a giant today’s well -lubricated technology through merger and acquisition, which cannot happen without a plan that looks for the future for years. Tan has been the CEO of the company since March 2006. At that time he was known as Avago Technologies. He bought Broadcom Corporation for ten years for his term of office and re -branded to get the name of the acquired firm (why he exchanges Avgo, although he preserved the same Stock Ticket). It continued to purchase a number of smart purchases, including the VMware agreement that broke the box office records that contribute to the charm of Broadcom’s stock. Analysts in Bernstein summarized well in the earnings reaction note. “Let’s assume that the Broadcom narrative will be lifted once more and that a bear will have to hope to pass over the skiing of the company.” “But we state that Broadcom knows this job better than anyone and that Hock should see a track here because it renews its contract until 2030. This argues that he sees something worth sticking around. The stock, which is as impressive as today’s stock movement, is actually cheaper than a P/E perspective on Thursday. Although the valuation is technically based on advanced forecasts that can be very pink, the reasons we put forward give us faith to trust us. These are: The largest new customer for special AI Chip Design Services, as we have seen with NVIDIA, the contract extension of a solid subsidiary, at least the stock rallies based on the earnings revisions equal to the movement price in the stock price tend not only justified, but also to have an additional room to work longer. Of course, there are many investors sitting on important paper profits in stock, so we could see that some nations steal records in the near future. In fact, as discussed at the morning meeting of Friday, we will do the same when we do not have trade restrictions. This is not against our conviction. Usually to make profits for fast, large gains and to correct positions that start to exceed our imposed 5% threshold is our discipline that causes our movement to make our Broadcom stock. 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