Broadcom: Checking Valuation Amidst a Flood of AI Orders - 2026.07.26

Hi, it's Peanut, fresh off the IB desk after crunching some numbers. Lately, the market atmosphere surrounding Broadcom (AVGO) has been quite heated due to the daily influx of AI-related positive news, but it's time to carefully examine whether these rosy reports can fully justify the current stock price.

💼 A Flood of AI Orders, Are the Fundamentals Solid?

Broadcom's recent business expansion is certainly notable. According to Reuters, Samsung Electronics has strengthened its foundry cooperation by signing a $200 billion AI chip partnership with Broadcom ^[1]. Furthermore, SK Chairman Chey Tae-won mentioned that Broadcom continues to demand a 'surprising number' of memory chips, which shows that demand for data centers and AI accelerators is strong ^[2]. On top of this, Simply Wall St has projected that Broadcom will take on a larger role in OpenAI's 2030 computing infrastructure build-out plan ^[3]. It is an undeniable fact that the company's position in the industry has become solid, as evidenced by the inclusion of a meeting with the Broadcom CEO in the South Korean President's visit to Silicon Valley ^[5].

⚠️ Valuation Burden, Possibility of a Value Trap?

However, there is a question we must ask ourselves here: 'Has all this good news already been priced in? Is the current valuation truly justifiable?' A TipRanks article also pointed out that while Broadcom is garnering high expectations amid the AI boom, there are also concerns due to its high valuation ^[4]. We must not forget the risk of falling into a value trap if the gap between growth potential and the current stock price widens. As of July 24, 2026, the stock closed at $381.92, showing a -2.69% decline in a single day.

📉 Short-term Swing Perspective and Risk Management

Ultimately, when market expectations are at their peak, even small disappointments or subtle changes in the macroeconomy can cause the stock price to fluctuate significantly. I believe that as long as the bullish atmosphere remains dominant, it is necessary to be cautious and review downside scenarios with a conservative yardstick once more. It will be important to verify with actual numbers whether the actual investment execution speed of hyperscalers and Broadcom's ability to defend profitability can justify this high valuation.

📰 Reference News (4)

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[Breaking] Chairman Chey Tae-won: "Broadcom continues to demand a surprising number of memory chips" - Korea Economic Daily

한국경제 · 2026.07.25

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📺 Reference Videos (1)

5

YouTube

'AI Diplomacy' in Silicon Valley... 11-day trip begins (2026.07.24/Newsdesk/MBC)

▶MBCNEWS·2026.07.24