From a peak of around US$490, Broadcom’s share price has dropped more than 30% to about US$330 per share, resetting its trailing P/E from over 70 to a more palatable level of over 40.
Still, investors should not ignore the custom chip designer’s concentration risk, with direct sales to one distributor accounting for 50% of its 3Q2026 net revenue.
In addition, its top five end customers account for approximately 55% of 3QFY2026 net revenue.
Despite these concentration risks, Broadcom remains dominant in custom chip design.
Revenue for its AI-driven Semiconductor Solutions segment skyrocketed 127% YoY to US$20.8 billion, lifting consolidated 3Q2026 revenue 85.5% YoY to US$29.59 billion, with an operating margin of 53.9%.
Backed by long-term demand from Big Tech firms such as Alphabet, Broadcom’s AI-led growth is expected to continue to 2031.
Crucially, Broadcom’s business is cash generative.In the nine months ended 2 August 2026 (9MFY2026), Broadcom’s FCF increased 64.2% YoY to $31.9 billion – a stark contrast to hyperscalers alarming negative FCF.
The current valuation reset of a cash-rich business like Broadcom may make it worth a closer look for long-term investors.
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