Broadcom Inc (AVGO)

Broadcom is the least understood of the large semiconductor companies, partly because half of it is now software. This page covers what the business actually is, the debt the VMware deal brought, and what to check.

The business

Two halves. Semiconductors — networking chips, and custom AI accelerators designed with individual hyperscale customers, which is a different business from selling a general-purpose GPU. And infrastructure software, largely VMware, acquired in a deal that reshaped the balance sheet. The custom silicon relationships are sticky in a way merchant chip sales are not, because the customer co-designs the product.

The moat

In semiconductors, the moat is design partnership: a hyperscaler that has co-developed a custom accelerator does not switch casually. In software, VMware has genuine enterprise switching costs, though aggressive licensing changes after the acquisition have tested customer patience and prompted some migration. The question worth watching is whether VMware retention holds at the new pricing.

What to check before you value it

• Debt from the VMware acquisition — It materially changed the balance sheet. Check interest cover and the maturity profile rather than the headline debt figure.
• The AI revenue forecast — Management has guided to a large addressable market several years out. That forecast, not current earnings, underpins the multiple — so ask what happens to the valuation if it is only half right.
• Customer concentration in custom silicon — A small number of hyperscale customers. Losing one is not a rounding error.
• VMware retention — Watch renewal rates rather than announced price rises. The second only helps if the first holds.

How much of it you already own

Broadcom is roughly 3.3% of the Vanguard S&P 500 UCITS ETF as at July 2026. Combined with NVIDIA that is over 11% of the index in two semiconductor companies — worth knowing if you also hold a technology fund. See what is inside an ETF.

Recent filings

That addressable market guidance is the number underpinning the valuation, and it is a forecast rather than a result. The July 2026 semiconductor selloff was largely a reassessment of exactly this kind of multi-year projection — see valuing chip stocks through a cycle.

How Oak Growth scores it

Oak Growth runs Broadcom through the same four pillars as every other company it covers — moat, management, economics and value — and publishes a discounted cash flow intrinsic value alongside the margin of safety against the current price. Because those figures move with the market and with each set of results, they live in the app rather than on this page. See the 4-pillar method →

Common questions

Is Broadcom Inc undervalued?

That depends on the price on the day you ask. Oak Growth publishes a discounted cash flow intrinsic value for Broadcom Inc and the resulting margin of safety, updated from live market data rather than a fixed figure. The checks that decide it are set out on this page.

Does Broadcom Inc have an economic moat?

Partly. Custom AI silicon designed jointly with a hyperscale customer is sticky because the customer co-designed it. VMware brings enterprise switching costs, though post-acquisition licensing changes have prompted some customers to migrate away.

Is AVGO in index funds and ETFs?

Yes. Broadcom was around 3.3% of the Vanguard S&P 500 UCITS ETF as at July 2026, and together with NVIDIA accounted for over 11% of the index.

How do you value Broadcom Inc?

Value the semiconductor and software halves separately, then stress-test management's AI addressable market forecast — the current multiple depends on it being largely delivered, so the useful exercise is asking what the shares are worth if it is only partly achieved.

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