Broadcom’s 40% Rally Raises Valuation Concerns for 2026 Returns
Broadcom stock climbed more than 40% over the past 12 months as part of a broader AI chip rally. Elevated valuations across leading chipmakers could pressure Broadcom’s returns in 2026 if growth expectations fall short.
1. AVGO Posts Strong Gains in 2025 Fueled by AI Demand
Broadcom (AVGO) delivered a standout performance in 2025, with its share price climbing over 40% in the trailing 12 months as investors poured into artificial intelligence chip stocks. The company’s networking and custom silicon solutions saw robust uptake from hyperscale data centers, contributing to a 35% year-over-year increase in semiconductor revenue in the third quarter. Broadcom also expanded its gross margin by 220 basis points to 67.5%, reflecting operational leverage on surging AI compute orders. Despite broader market volatility tied to President Trump’s tariff announcements, AVGO outpaced the S&P 500, reinforcing its status as a leading play on AI infrastructure trends.