Broadcom: A Most Prudent Long-Term Engagement

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In the realm of investments, as in society, one must avoid the folly of placing all one’s trust in a single suitor. Though a favored stock may charm for a season, its fortunes may wane with the turn of the year. A more prudent course is to cultivate a circle of acquaintance-be it a dozen or two-across varied spheres, or to invest in the broad, reliable companionship of an index fund.

Yet should circumstance compel me to wed a single stock for the remainder of my days, I should likely select Broadcom (AVGO). Let us peruse the pedigree of this industrious house, its strategic alliances, and the prospects of its future prosperity.

A Brief Chronicle of the “New” Broadcom

In the year 2016, the Singaporean firm Avago, a maker of fine chips, acquired the original Broadcom. Prior to this union, Avago traded in wireless, storage, and optical components, while its rival Broadcom, though overlapping in some pursuits, also supplied mobile and multimedia devices. This marriage of convenience transformed Avago-renamed, with a flourish, as the “new” Broadcom-into a preeminent supplier of essential wares for enterprise, industry, and mobile pursuits. A fabless chipmaker, it wisely outsources production, thus avoiding the burdens of capital-heavy ventures. In 2018, during the first days of the Trump administration, it further relocated its seat of governance to the United States.

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Subsequently, Broadcom expanded its dominion through the acquisition of CA Technologies in 2018, Symantec’s security operations in 2019, and the cloud giant VMware in 2023. These alliances lessened its reliance upon Apple, its principal client, and softened the vicissitudes of the semiconductor trade.

In fiscal 2024, the company derived 58% of its revenues from semiconductor solutions and 42% from infrastructure software-a balance more admirable than many of its peers.

A More Equitable Claim to the AI Realm Than Nvidia

From 2019 to 2024, Broadcom’s revenues and adjusted EBITDA grew at a compound annual rate of 19% and 28%, respectively, even as the world grappled with pandemic, inflation, and geopolitical discord. This vigor arose from its bold acquisitions, the 5G upgrade cycle, and the meteoric rise of artificial intelligence.

Broadcom offers a range of networking, optical, and custom accelerator chips to support AI pursuits, rendering it a more balanced contender in this lucrative field than Nvidia, which leans heavily upon its data center GPUs. In fiscal 2024, Broadcom’s AI-related sales soared 220% to $12.2 billion, constituting 24% of its revenues. For 2025, it anticipates a further 63% surge to $19.9 billion-nearly a third of its projected income. This growth compensates for the slower pace of its non-AI ventures, which it expects to recover by the close of 2026 as market cycles stabilize.

Broadcom Remains a Reasonable Proposition

Though its shares have risen 820% in five years, Broadcom’s valuation remains modest at 27 times next year’s adjusted EBITDA. Analysts foresee revenue and EBITDA growth of 23% and 25% annually through 2027. These gains may yet exceed expectations should Broadcom continue its habit of acquiring promising estates in the chip and software realms.

Thus, should one be constrained to a single investment, Broadcom presents a most agreeable prospect: a robust enterprise with a wide moat, a spirit of expansion, and a price that does not offend the sensibilities of a prudent investor.

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2025-09-10 15:59