Broadcom (AVGO) Valuation Analysis: Reddit Debate & Market Context

The debate in the Reddit post [4] centers on Broadcom’s (AVGO) valuation at ~$1.8T market cap. Bearish claims include VMware price hikes driving customer migration to alternatives like ProxMox and Nutanix, and lagging growth vs peers. However, internal data [0] shows AVGO’s PEG ratio (0.57-0.59x) is lower than NVDA (0.68-1.32x) and AMD (1.9x), contradicting the post’s assertion of a worse PEG than NVDA. VMware’s 25% YoY revenue growth [1] stems from aggressive price hikes (200-1000% for some customers) rather than new sign-ups, leading to 2700+ customers migrating to Nutanix [1]. On the bullish side, AVGO’s Q3 AI semiconductor revenue grew 63% YoY to $5.2B, with a $110B backlog [0], and the VMware acquisition has reduced cyclical risk by balancing semiconductor and software revenue (near 50/50 split).

Cross-domain insights include the tension between VMware’s short-term revenue gains and long-term retention risks—price hikes boost current revenue but may erode the software segment’s customer base over time. The discrepancy between the Reddit post’s PEG ratio claim and authoritative data [0] highlights the importance of verifying user-generated content against tier-1 sources. Additionally, AVGO’s AI backlog ($110B) [0] and Jefferies’ projection of $100B 2026 revenue [3] suggest strong long-term AI growth potential, offsetting some VMware-related risks.

: Regulatory scrutiny in Europe over VMware’s pricing tactics [1] could force pricing adjustments, impacting software revenue. VMware customer churn, as indicated by Nutanix’s 2700+ new customers [1], may erode the software segment’s long-term revenue base. : AVGO’s AI semiconductor segment’s strong growth and backlog [0] present a significant catalyst. The company’s low PEG ratio [2] indicates valuation is attractive relative to growth vs peers.

Broadcom’s current metrics include a P/E ratio of 98.99x, net profit margin of 31.59%, and ROE of 27.01% [0]. The AI semiconductor segment contributes 63% of semiconductor revenue [0], with a $110B backlog. VMware’s revenue grew 25% YoY [1] due to price hikes, but customer migration to alternatives is a concern. Jefferies projects AVGO’s 2026 revenue at $100B [3], driven by AI.