Broadcom: Why Q3 Is Not Going To Change Anything

Zbigniew Budzinski, CFA 79 Followers Follow Summary Broadcom remains rated 'Hold' as its current valuation aligns with updated models, with a range of $346.03–$382.37. Recent underperformance by AVGO is tied to VMware security flaws and risks to the software segment's 79% operating margin. Key focus areas are FY2027 AI guidance, Q4 gross margin amid rising memory costs, and potential weakness in software renewals. Scenario weighting (market mood) has a greater impact on valuation than near-term earnings or guidance changes; there is no material catalyst to change the rating post-earnings. Jonathan Kitchen/DigitalVision via Getty Images Introduction Over a month ago I started covering Broadcom ( AVGO ) and came to the conclusion it is a classic “Hold” company where the market price is close to what valuation models indicate. You can find my initial analysis and This article was written by Zbigniew Budzinski, CFA 79 Followers Follow Curiosity is my middle name. I started my career as a fixed-income quant focusing on Polish bonds, later expanding into US Treasuries, before transitioning to the equity side as one of the youngest pension fund managers in Poland, running the equity book mostly single-handedly at the age of 25. A few years later, after delivering strong results, I experienced burnout and chose to spend a decade as a full-time private investor, focusing on major stock indices and commodity futures. I then returned to the institutional side, spending seven years managing a global listed REITs alternative fund for a Luxembourg-based boutique. While the investment track record was excellent, asset growth was sluggish, and with the outlook for REITs in 2024 looking average at best, I decided to pivot. Today, I dive deep into secular technology trends on my own—specifically the AI revolution, space tech, quantum computing, and biotechnology. I am here on Seeking Alpha to share my research, investment ideas, and financial models. While I am not a native English speaker, I let the quality of my numbers do the talking. My modeling approach is strictly conservative (often highly so); over 30 years of market experience have taught me that incorporating a wide margin of safety is vital, as market anomalies and negative surprises happen far more often than most people, and especially analysts, like to admit. Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.