Broadcom (NASDAQ:AVGO) stock has pulled back meaningfully from its highs, falling more than 23% from its 52-week peak. The decline has occurred despite robust demand for artificial intelligence semiconductors and continued strength in the company’s infrastructure software business. Instead, macro uncertainty, geopolitical risks, and near-term margin questions have weighed on investor sentiment.
Even so, Wall Street analysts remain constructive on the Broadcom stock outlook. Expectations are that AI-driven growth, a massive backlog, and resilient software revenue will support earnings expansion and eventually fuel a recovery in AVGO shares over the next year.
Broadcom Stock Outlook Amid a Recent Pullback
The recent weakness in Broadcom stock reflects caution rather than deterioration in fundamentals. Investors have become more risk-averse amid geopolitical uncertainty and concerns around how product mix could affect margins as AI accelerators scale. These factors have pressured the stock in the short term, even as Broadcom continues to post record financial results.
Fiscal 2025 marked a standout year for the company, with total revenue climbing 24% year over year to $64 billion. Growth was powered by two engines: AI semiconductors and infrastructure software, particularly following the VMware integration. This strong performance suggests the pullback is more about sentiment than structural issues.
AI Demand Continues to Drive Broadcom’s Growth
A core pillar of the Broadcom stock outlook is accelerating AI demand. AI-related revenue surged 65% in fiscal 2025 to $20 billion, helping semiconductor revenue reach a record $37 billion. Broadcom has positioned itself as a critical supplier to hyperscalers through its custom accelerator, or XPU, business.
These custom chips are increasingly being adopted not only for internal workloads but also for external scaling, where customers extend capacity to third-party users. Management believes this opens a large incremental opportunity, as XPUs become embedded deeper into AI infrastructure ecosystems.
Broadcom’s order momentum underscores this strength. The company secured a $10 billion order to supply its Ironwood TPU racks to Anthropic, followed by an additional $11 billion order for delivery in late 2026. During the fourth quarter, Broadcom also added a fifth XPU customer, with a $1 billion order scheduled for late 2026.
Beyond compute, AI networking demand is surging. Broadcom’s AI switch backlog now exceeds $10 billion, driven by record bookings for its Tomahawk 6 switches. Demand has also been strong for digital signal processors, optical components such as lasers, and PCI Express switches. By the end of the fourth quarter, Broadcom reported more than $73 billion in AI-related orders, representing nearly half of its total consolidated backlog of $162 billion.
Management expects most of this AI backlog to be delivered over the next 18 months. In the first quarter of fiscal 2026 alone, AI revenue is projected to double year over year to $8.2 billion, reinforcing confidence in the medium-term growth trajectory.
Infrastructure Software Adds Stability
While AI grabs headlines, infrastructure software remains a key stabilizer for the Broadcom stock outlook. The segment continues to benefit from strong adoption of VMware Cloud Foundation. In the fourth quarter, infrastructure software bookings reached $10.4 billion, up from $8.2 billion a year earlier, pushing the software backlog to $73 billion.
Although management expects renewals to be seasonally softer in the first quarter, it still forecasts low double-digit growth in infrastructure software revenue for fiscal 2026. This recurring, high-margin revenue stream provides predictability and helps offset potential volatility in semiconductor cycles.
Importantly, the combination of AI-driven hardware growth and steady software expansion creates meaningful operating leverage. While margins could face some pressure from product mix shifts, overall earnings growth is expected to remain strong.
What Analysts Expect for Broadcom Stock
Wall Street remains firmly bullish on Broadcom stock. AVGO carries a consensus “Strong Buy” rating, reflecting confidence in the company’s AI positioning and backlog visibility. The average analyst price target of $453.77 implies more than 47% upside from the stock’s early February level near $308.
Valuation further supports this optimism. Broadcom stock trades at a forward price-to-earnings multiple of about 36.9, which appears reasonable given expected earnings growth of 54.4% in fiscal 2026 and an additional 40.7% in 2027. Compared with other large-cap AI beneficiaries, AVGO’s valuation looks compelling relative to its growth profile.
Broadcom Stock Outlook: Pullback or Opportunity?
The current pullback in Broadcom stock appears driven by caution rather than weakening fundamentals. With a massive AI backlog, expanding custom accelerator adoption, and resilient infrastructure software revenue, Broadcom is positioned for continued growth in 2026 and beyond.
For long-term investors, the Broadcom stock outlook suggests the recent decline could represent an opportunity rather than a warning sign, provided the company continues executing on its AI and software strategy as analysts expect.
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