AVGO Stock Outlook 2026: Buy The Dip Amid AI Growth or Wait for Clarity?

• AVGO reported $18.02 billion in Q4 2025 revenue, exceeding estimates by 3.18% and showing strong AI and networking growth.
• A fair value estimate of $403.66 suggests potential undervaluation despite a P/E ratio of 72.7x, higher than industry peers.
• Recent stock dips reflect concerns about AI spending, regulatory scrutiny, and market rotation, but institutional investors remain bullish on long-term AI infrastructure growth.

The past few weeks have been a rollercoaster for AVGO stock. After delivering a Q4 2025 earnings beat, the stock has experienced a correction, driven by a mix of macroeconomic concerns and AI adoption uncertainty. But for patient investors, these dips are being framed as potential generational buy opportunities. Let's unpack what's driving the narrative and whether now is the time to consider Broadcom.

Did AVGO Stock Fall Despite Strong Q4 Earnings for AVGO Stock?

Broadcom's Q4 2025 results were a clear win: the company delivered $18.02 billion in revenue, topping estimates by 3.18% and with adjusted EPS of $1.95. These numbers are a testament to the company's strong position in AI infrastructure and networking. However, the stock still fell 4.6% in one trading session amid investor concerns about a Chinese directive against U.S. software and a $4.5 billion debt offering.

This dip was also exacerbated by the stock breaching its 50-day moving average and broader market rotation out of high-growth tech. Yet, despite the short-term volatility, the long-term fundamentals remain robust. Broadcom has an $73 billion AI-related backlog and has secured a fourth major XPU customer, suggesting solid growth tailwinds for 2026.

What Does the AVGO Valuation Suggest for Long-Term Investors?

At $354.61, AVGO is trading below a fair value estimate of $403.66, according to recent valuation models. The stock's P/E ratio of 72.7x is significantly higher than the industry average of 56x. This could be a point of concern for some, especially if the market revalues the stock closer to its peers' average P/E of 55.4x. However, it's also worth noting that the company's 8x shareholder return over five years and a 3.15% 7-day gain suggest resilience.

Analysts have also adjusted their targets, with Mizuho raising AVGO's price target as part of its 2026 outlook, indicating growing confidence in the firm's long-term trajectory. The challenge lies in balancing the high valuation with the potential for recurring software revenue and AI accelerator demand.

Is AVGO Stock a Buy-the-Dip Opportunity in the AI Infrastructure Transition?

The broader market is beginning to take note. Wall Street analysts have largely rated AVGO as a top AI chip stock, with 46 out of 48 analysts assigning it a buy or equivalent rating. Unlike competitors like Nvidia, which focus on GPUs, Broadcom is playing a broader role across the AI infrastructure value chain, including networking and custom ASIC design for hyperscalers.

The recent volatility has also introduced new dynamics in the competitive landscape. While Nutanix and Arista Networks have seen some gains, Broadcom's Tomahawk 6 switches and custom XPUs are reinforcing its competitive edge. Moreover, the company is well-positioned to benefit from the 1.6T Ethernet transition, which could drive multi-year revenue growth.

Still, regulatory scrutiny, particularly in the EU, remains a wildcard. Investigations into Broadcom's licensing practices post-VMware acquisition add a layer of uncertainty. However, the company's strong cash flow and R&D spend offer a buffer against short-term headwinds.

Looking ahead, investors should watch for key catalysts: new custom silicon deals, progress in AI networking, and the potential for valuation expansion if earnings expectations are met. For now, the stock appears to be consolidating at support levels, with an oversold RSI suggesting a potential rebound could be in the cards for AVGO in 2026.