Broadcom (AVGO) is back in focus after its latest quarter, where record AI chip revenue and strong guidance sat alongside a sharp share-price pullback as investors reassessed lofty expectations for the stock.

The recent pullback has been sharp, with the share price down 7.92% over the last day and 13.66% over the week. However, the 1 year total shareholder return of 57.48% and very large 5 year total shareholder return indicate a powerful longer term trend that is now being reassessed as AI expectations cool.

If you are weighing Broadcom against other AI infrastructure opportunities, this is an ideal moment to see what else is moving and compare it with 48 AI infrastructure stocks

Record AI revenue, reaffirmed long term targets and a share price that just erased a chunk of its recent gains now leave Broadcom at a crossroads. Is this a reset that creates an entry point, or proof that future growth is already priced in?

Most Popular Narrative: 40.7% Undervalued

According to the most followed narrative, Broadcom's fair value of $650 sits well above the last close at $385.73. This frames the latest pullback as a valuation gap rather than a completed story.

Broadcom is a pick-and-shovel AI infrastructure giant disguised as a chip roll-up plus VMware boo. With dual engines, custom ASICs for hyperscale customers and high-margin software from VMware, it offers exposure to the AI boom with operational discipline and deep enterprise penetration.

Curious what justifies such a large gap between price and fair value? The narrative focuses on compound revenue expansion, rising profitability, and a cash flow profile that feeds into that $650 figure.

Result: Fair Value of $650 (UNDERVALUED)

However, this bullish setup can crack if customer concentration bites or if supply chain and geopolitical issues disrupt Broadcom’s AI hardware and VMware driven story.

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Another View: Rich P/E Keeps Expectations High

That $650 fair value and 7.7% discount on our model sit alongside a P/E of 62.3x, compared with 61.8x for the US Semiconductor industry and 79.2x for peers, while the fair ratio points to 77.4x. The gap suggests room for upside, but also less margin for disappointment if growth cools.

Next Steps

Seen enough to get a feel for the mixed mood around Broadcom, with strong returns and premium expectations now under closer scrutiny? Act while the data is fresh and shape your own view by weighing the 3 key rewards and 2 important warning signs

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.