Broadcom Inc.
Information Technology · Semiconductors
Two structural legs: (1) custom XPU silicon for hyperscalers - $GOOGL TPU (7th gen), $META MTIA, and a rumored third large customer - guided to $60-90B SAM by FY27; (2) VMware ($69B acquisition Nov-2023) running at ~$20B ARR after subscription conversion and customer trim.
- AI semi revenue $12B FY24 → guided ~$25B+ FY25 trajectory; XPU + networking mix shifts margin up
- Tomahawk 5/6 + Jericho3-AI lock in ethernet vs InfiniBand share gain inside hyperscaler scale-out fabrics
- VMware FCF conversion ahead of Hock Tan playbook (CA + Symantec template); software gross margin ~90%
- Dividend + buyback floor; $25B repurchase authorization, dividend raised every year since 2010
- $AAPL wireless content multi-year extension signed 2026; baseline RF revenue de-risked
- Hyperscaler ASIC concentration: top 3 customers ~40%+ of semi revenue, any TPU/MTIA pause hits FY guide
- VMware revenue still declining YoY in some segments as Tan trims long tail; perpetual-license churn visible
- Custom ASIC moat narrower than $NVDA CUDA - $MRVL competes for the same hyperscaler sockets
- Wireless segment ($AAPL) is single-customer concentration risk in cyclical handset TAM
- ~30x forward P/E prices in flawless XPU ramp; FY27 SAM math assumes 3 large customers shipping volume
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