Broadcom Inc. (AVGO) Stock Analysis

Broadcom’s primary competitive advantages stem from its scale, technology breadth, and customer entrenchment. The company is a top-five global fabless semiconductor supplier, with leading positions in networking, custom AI accelerators, and infrastructure software. Its semiconductor segment benefits from deep, multi-year relationships with hyperscale cloud providers, who increasingly rely on Broadcom for custom AI chips and high-speed networking silicon. For example, Broadcom and Marvell are currently the only credible suppliers of custom AI ASICs to major U.S. hyperscalers, due to their access to advanced manufacturing at TSMC, proprietary packaging, and proven execution—barriers that smaller rivals like Alchip or MediaTek have not overcome.

Broadcom’s software portfolio, bolstered by the VMware acquisition, provides recurring, high-margin revenue and further embeds the company in enterprise IT infrastructure. The company’s gross margin (63% in FY24) and operating margin (26%) are among the highest in the sector, reflecting pricing power and operational discipline.

Customer concentration is a double-edged sword: one distributor accounted for 28% of FY24 revenue, and the top five end-customers for 40%. However, this also signals Broadcom’s critical supplier status. Compared to peers such as Qualcomm (wireless) and Marvell (networking), Broadcom’s diversification across both hardware and software, and its willingness to exit low-return businesses, support above-peer returns and resilience to industry cycles.