Broadcom's Time is Nearing as Neocloud Risk Jolts Nvidia

Key Points:

• Broadcom shares dropped 9.07% to $328.75 in the week ending October 16, prompting the author to buy more based on confidence in Broadcom's AI chip co-design business with major AI builders.
• Broadcom's AI semiconductor revenue surged 221% year-over-year to $16.7 billion in fiscal Q3, with guidance for $21.7 billion in Q4 and projections of $115 billion and $230 billion for fiscal 2027 and 2028 respectively, supported by secured supply agreements.
• The company demonstrated strong financial health with $13.7 billion free cash flow (46% of revenue), a 15th consecutive annual dividend increase, $5.6 billion debt retirement, and consistent earnings beats over 10 quarters.
• Broadcom's valuation appears attractive at about 11 times the projected $30+ earnings per share for fiscal 2028, compared to competitors NVIDIA and Marvell, which have higher valuations and lower dividend yields.
• Risks include customer concentration among six XPU clients and potential deployment delays due to infrastructure constraints, but long-term contracts with hyperscalers like Google and a $24 billion cash reserve support the author's bullish outlook ahead of Broadcom's December 9, 2026 earnings report.