The current enthusiasm for hyperscalers is, predictably, bordering on the hysterical. One observes the usual scramble for novelty, the unseemly haste to attach oneself to the latest glittering bauble. However, amidst this frenzy, Broadcom (AVGO +2.31%) presents itself as something rather more…substantial. It is not, perhaps, a company to quicken the pulse, but a manufacturer of consequence, possessed of an AI-driven backlog and, crucially, a history of delivering on its promises. A decidedly unromantic prospect, yet one not to be dismissed.
The Matter of Backlogs
Broadcom, engaged in the rather unglamorous business of designing semiconductors and infrastructure software, has amassed a backlog of approximately $73 billion specifically for AI projects. A figure that, while impressive to the layman, is best understood as a testament to the sheer scale of contemporary profligacy. The total backlog stands at $162 billion, exceeding projected revenue for fiscal year 2025. Of the AI-related orders, a substantial $21 billion originates from Anthropic, a company dedicated to the pursuit of artificial intelligence. One trusts they have a sound business plan.
The company’s diversification – a combination of chips and software solutions – offers a modicum of protection against the vagaries of the market. Contracts with entities such as Alphabet’s Google (GOOG +2.29%) (GOOGL +2.31%) and Meta Platforms (META +2.35%) provide further reassurance, though one notes the inherent risk of relying on the continued benevolence of such behemoths.
A Momentary Dip
There exists, naturally, a concentration risk. A significant portion of Broadcom’s revenue is, after all, derived from a handful of major clients. However, the expanding backlog, while not entirely negating this concern, does offer a degree of mitigation.
The stock has experienced a minor decline of over 7% at the start of 2026. Timing the market is, of course, a fool’s errand. However, for those inclined to adopt a longer-term perspective – a period of five years, for instance – a slight dip may present a reasonable entry point. The stock has, in recent months, enjoyed a premium valuation. Broadcom, while lacking in glamour, remains a compelling growth prospect, well-positioned to capitalize on the ongoing demand for AI infrastructure and chips. A decidedly unexciting, yet potentially rewarding, investment.
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2026-01-26 20:43