Broadcom (AVGO 1.04%) may not get the attention of some of its peers in the technology sector, but make no mistake: the company is a key player in the space. Its products represent a broad cross-section of tech infrastructure and are a crucial part of the artificial intelligence (AI) revolution.
Shareholders have been the ultimate beneficiaries as Broadcom leverages this opportunity, driving its sales and profits higher. This, in turn, has driven its stock price up 437% over the past three years (as of this writing) and up 60% during the past 12 months.
The company faces a key hurdle when Broadcom reports its fiscal 2026 first-quarter results after the market close on March 4. Given the stock's meteoric rise over the past year, should investors lay out their hard-earned money to buy shares ahead of this crucial financial report? Let's see what the evidence suggests.
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Chip shot
Broadcom provides a wide array of technology solutions that reach into every nook and cranny of the industry. These diverse offerings include software, semiconductor, and security products serving the mobile, broadband, cable, and -- perhaps most importantly -- data center industries.
The dawn of AI in early 2023 represented a singular opportunity, and Broadcom positioned itself to profit. The company's Application-Specific Integrated Circuits (ASICs) can be customized to accelerate AI workloads while being more energy-efficient than rival graphics processing units (GPUs). Broadcom also supplies many of the networking solutions that form the backbone of data center operations.
This strategy has been lucrative for Broadcom. In its fiscal 2025 fourth quarter (ended Nov. 2), the company generated revenue of $18 billion, up 18% year over year, while its adjusted earnings per share (EPS) of $1.95 jumped 37%. AI semiconductor revenue led the charge, growing 74%.
Management is predicting that the good times will continue. For the first quarter, Broadcom is guiding to revenue of $19.1 billion, representing 28% growth, and adjusted EBITDA of roughly $12.8 billion, up 27%.
Broadcom's payout is icing on the cake, with a dividend of $0.65 per quarter, with a current yield of roughly 0.8% -- the result of a soaring stock price. Furthermore, its payout ratio of 50% and rising profits suggest Broadcom has plenty of resources to add to its 15 consecutive years of dividend increases.
Data by YCharts
Should you buy Broadcom stock before Thursday?
The chart above illustrates Broadcom's stock price movements during the past three years. The purple circles with the letter "E" at the center indicate when the company reported its financial results. In the majority of these cases, or 67% of the time, the stock price increased as investors piled into the stock after its financial report.
Broadcom tends to underpromise and overdeliver, reporting results that are better than expected and raising its forecast. Yet even when investors were initially pessimistic, the company's long track record of growth and stellar performance eventually won them over, sending the stock higher.
I generally don't recommend date-driven buying, but instead suggest focusing on the long-term opportunity. For investors looking to establish a position or increase an existing one, now might be a good time. Despite robust results, Broadcom stock is down 23% from its peak as investors pause to assess the ongoing adoption of AI.
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Key Data Points
What does Wall Street have to say?
Wall Street is extremely bullish. Of the 50 Wall Street analysts who offered an opinion in March, 96% rate the stock a buy or strong buy, and none recommended selling.
The stock's valuation might be a sticking point for some investors, as Broadcom is currently selling for 31 times forward earnings (as of this writing). While that might seem pricey, I'd submit it's a fair price to pay for a company with Broadcom's track record of success.
While investors pause to assess the future of AI, most experts agree that the opportunity continues to unfold. Big Four accounting firm PricewaterhouseCoopers (PwC) estimates that AI will contribute $15.7 trillion to the global economy by the end of the decade.
Given the company's successful track record, rising sales and profits, and strong secular tailwinds, the evidence suggests that Broadcom stock is a buy.
