AVGO: The AI Infrastructure Winner Cramer Says to Wait For

Jim Cramer just called Broadcom a "winner in this environment, not a loser." That's the bullish headline. The reality check? The stock is down more than 23% from its 52-week high. The tension is real: a top-tier AI infrastructure play getting a "wait" from its most famous cheerleader.

Cramer's exact advice is clear: "I think that Broadcom is down to the level, it's about a hundred points from its high." His take? Buy the dip, but wait for the price to come down further. He's betting on CEO Hock Tan's track record and the company's AI moat. The setup is a classic contrarian signal: a proven winner getting hit by sentiment, not fundamentals.

So what's driving the pullback? It's a mix of geopolitical uncertainty and a specific margin question that hit the market hard. After a strong beat, the stock got slammed because the CFO's comment about future AI systems having lower gross margins spooked investors. That's the noise. The signal is that the core demand remains rock-solid, with a $73 billion AI order backlog and record software growth.

The bottom line? Cramer sees a setup where patience pays off. The 23% drop creates a potential entry point for those who agree the company is a winner, not a loser. The question is whether the wait is worth it.

The AI Engine: Revenue & Margin Powerhouse

Let's cut through the noise and look at the raw numbers. This isn't just a story about AI hype-it's about explosive, record-breaking execution.

The foundation is set. Fiscal 2025 was a landmark year, with revenue rising 24% year over year (YoY) to $64 billion. That growth wasn't broad-it was laser-focused on AI and VMware. The result? A profitability explosion. The net income margin nearly doubled to 36.2%. That's the kind of margin expansion that turns a good story into a great investment thesis.

Now, the engine is accelerating. For the first quarter of fiscal 2026, management is guiding to revenue of approximately $19.1 billion. That implies a 28% year-over-year growth rate. More importantly, they're projecting AI semiconductor revenue to double year-over-year to $8.2 billion. This is the core driver: custom AI accelerators and Ethernet switches are scaling at a blistering pace.

The bottom line? The AI infrastructure winner is delivering on its promise with staggering financial power. Revenue is surging, margins are exploding, and the guidance shows no signs of slowing. This is the fundamental engine that Cramer is betting on.

The Google Catalyst & Competitive Moat

The market just got a massive, concrete catalyst. Google just announced it plans to spend up to $185 billion on capital expenditures this year, nearly double its 2025 outlay. That's not just a number-it's a direct, multi-year order book for the entire AI infrastructure supply chain. The reaction was immediate: Broadcom shares jumped 6% after hours.

This is the unique, high-impact catalyst. While Nvidia gets the GPU headlines, Google's custom chip strategy is creating a parallel, Broadcom-centric universe. The company is the critical partner helping Google design and manufacture its proprietary Tensor Processing Units (TPUs). In a major move, Broadcom sold Google's TPU Ironwood rack systems to Anthropic, turning Google's internal infrastructure into a product line. This isn't a one-off deal; it's a deep integration into Google's AI hardware stack.

Broadcom's moat here is its diversified AI play. It's not just a GPU supplier. The company's strength lies in infrastructure software, which makes up 42% of its revenue, plus its networking dominance. This gives it a unique advantage: it's the essential glue connecting Google's custom silicon to the data center and the wider network. The Google cohort is laughing because this spending spree directly benefits Broadcom's custom ASIC business and its software and networking solutions.

The bottom line? Google's $185B bet is a massive, near-term tailwind. It validates Broadcom's strategy of being a key beneficiary of custom chip adoption, not just a passive recipient of GPU demand. This is a high-conviction, specific catalyst that strengthens the core thesis beyond just waiting for a dip.

The CEO Bet & What to Watch

The real alpha leak here is in the executive compensation. CEO Hock Tan just got a massive new contract, and it's a direct bet on the AI future. His plan ties over 610,000 shares to achieving $90 billion+ in AI revenue by 2030. That's not just a bonus; it's a multi-year performance pledge. The upside is huge-his award could double if AI revenue hits $105B, and triple beyond $120B. The downside? Forfeit it all if the company fails to hit $60B. This aligns his wallet 100% with long-term growth, removing any short-termism.

So what's the immediate watchlist? The primary near-term catalyst is clear: Google's $185 billion capital expenditure plan. The market already reacted with a 6% pop. Now, the focus shifts to execution. Can Broadcom convert that massive spending spree into concrete revenue? The company's custom ASIC and software moat is perfect for this, but the stock's valuation multiple will be pressured if that conversion stalls.

The key risks are external. Geopolitical uncertainty remains a persistent headwind, adding volatility. More critically, any slowdown in hyperscaler AI spending-whether from economic shifts or technical adoption curves-could pressure the stock's premium multiple. The CEO's bet is for the long haul, but the near-term path depends on Google's capex turning into Broadcom's top and bottom lines. Watch the backlog conversion and quarterly guidance for the signal.