Broadcom Inc. (AVGO) shares surge 3.70% in 2 days on AI infrastructure growth, Apple partnership boost

Broadcom Inc. (AVGO) shares surged to a new peak on Wednesday, hitting their highest level since August 2025, with an intraday gain of 2.87%. The stock has risen 3.70% over two trading days, reflecting sustained momentum driven by strategic advancements in AI infrastructure and key partnerships.

The strategy of buying Broadcom (AVGO) shares after they reached a high and holding for one week delivered strong returns over the past five years. The compound annual growth rate (CAGR) was 81.08%, with an overall return of 310.15%. This outperformed the benchmark return of 49.45% by a significant margin of 260.70%. The recent surge in AI revenue has further boosted the stock's performance, highlighting the effectiveness of this strategy in capturing short-term gains while benefiting from Broadcom's long-term growth.

The company’s AI networking division has become a core growth engine, with the launch of the Jericho4 Ethernet fabric router. This product, capable of connecting over a million AI accelerators across data centers, underscores Broadcom’s leadership in high-performance computing. AI networking revenue jumped 170% year-over-year in Q2 2025, accounting for 40% of total AI revenue. Hyperscalers like Alphabet and Meta are major beneficiaries of Broadcom’s ASICs, which power generative AI training at scale.

A pivotal collaboration with Apple further bolstered investor confidence. The tech giant designated Broadcom as a key partner in its American Manufacturing Program, co-designing 5G components to mitigate potential Trump-era chip tariffs. Apple’s $100 billion investment in the program is expected to secure long-term sales for Broadcom while aligning with U.S. manufacturing incentives. This partnership strengthens Broadcom’s position in the semiconductor supply chain, outpacing rivals in market share gains.

Financially, Broadcom’s robust cash reserves—$9.47 billion in cash and equivalents—support aggressive shareholder returns. In Q2 2025, the company returned $7 billion to investors via dividends and buybacks, leveraging strong operating cash flow. However, margin pressures persist as AI infrastructure products, which carry lower margins, dominate revenue growth. Analysts note that while AI remains a tailwind, non-AI segments face challenges from slowing demand in storage and industrial markets.

Macroeconomic tailwinds, including U.S. policies favoring domestic chip production, have amplified Broadcom’s strategic advantages. The stock’s 30.4% year-to-date gain outperforms peers, but its premium valuation—19.59 times forward sales—raises questions about sustainability. Investors are advised to balance optimism over AI-driven demand with caution regarding margin compression and broader economic uncertainties.