Is Broadcom Stock Still a Buy in 2026 Amid Rising Valuations and Strong Analyst Outliers?

The question of whether Broadcom (AVGO) remains a compelling investment in 2026 hinges on a delicate balance between analyst optimism, valuation risks, and the transformative potential of artificial intelligence (AI). With a surge in price targets and bullish forecasts, the stock has become a focal point for investors seeking exposure to the AI monetization supercycle. Yet, as valuations stretch, the challenge lies in discerning whether the market's enthusiasm is justified by fundamentals or if it risks overreach.

Analyst Optimism and AI-Driven Growth

Broadcom has attracted significant attention from Wall Street analysts, who have repeatedly upgraded their price targets and maintained strong Buy ratings. Goldman Sachs, for instance, added AVGO to its US Conviction List, maintaining a $450 price target and highlighting the company's "dominant" position in enterprise networking silicon. Similarly, Truist raised its target to $510, while UBS analyst Timothy Arcuri emphasized that the market had overreacted to recent volatility, affirming a Buy rating with a $475 target. The average analyst price target of $412 reflects a consensus that Broadcom's leadership in AI infrastructure-particularly its custom application-specific integrated circuits (ASICs)-positions it to outperform broader competitors like Nvidia.

This optimism is grounded in Broadcom's AI-driven revenue growth. In fiscal 2025's fourth quarter, the company generated $6.5 billion in AI semiconductor revenue, a 74% year-over-year increase, outpacing Nvidia's 66% growth in its data center segment. For Q1 2026, Broadcom expects AI revenue to reach $8.2 billion, driven by demand for its ASICs, which offer superior cost efficiency and performance for specific AI workloads. Google's custom Tensor Processing Unit (TPU) v7 chips, supplied by Broadcom, are projected to contribute $22.1 billion in fiscal 2026 alone, while partnerships with hyperscalers like Meta and ByteDance further solidify its market position.

Valuation Metrics: A Double-Edged Sword

Despite these growth metrics, Broadcom's valuation appears stretched relative to industry benchmarks. As of early 2026, the stock trades at a trailing price-to-earnings (P/E) ratio of 69.49 and a forward P/E of 33.33, with an enterprise value-to-sales (EV/Sales) ratio of 25.44 according to market data. While its price-to-earnings-to-growth (PEG) ratio of 0.93 suggests undervaluation relative to expected growth, this metric is significantly below the sector median, raising questions about whether the market is discounting future risks.

Comparisons with peers highlight the tension. TSMC, for example, trades at a forward P/E of 28.4 and a PEG ratio well below 1, reflecting its efficiency in manufacturing and lower valuation expectations. Meanwhile, Nvidia's trailing P/E of 45.3x and EV/EBITDA of 39.5x, though high, appear relatively justified by its 1.7x PEG ratio, which aligns its price with projected earnings growth. In contrast, Broadcom's EV/EBITDA and EV/Sales multiples exceed those of many competitors, suggesting that its valuation is increasingly decoupled from traditional profitability metrics.

The AI Infrastructure Play: Justified or Overhyped?

Broadcom's strategic focus on custom silicon for AI infrastructure is a key differentiator. Its ASICs, tailored for hyperscalers, offer a compelling value proposition by reducing costs and improving performance for inference tasks-a critical use case in AI deployment. The company's recent $4.49 billion debt raise and the launch of next-generation chips like the BCM4918 and Wi-Fi 8 platform underscore its commitment to capitalizing on this trend. Analysts argue that Broadcom's role in powering AI infrastructure for major clients positions it to benefit from the broader AI monetization supercycle, even as it faces competition from traditional GPU-based solutions.

However, the sustainability of this growth depends on continued adoption of ASICs by tech firms. While Google, Meta, and ByteDance have embraced Broadcom's offerings, the market remains concentrated, and any slowdown in hyperscaler spending could dampen revenue projections. Additionally, the company's reliance on a narrow set of high-margin products exposes it to supply chain risks and technological obsolescence if AI workloads shift toward alternative architectures.

Conclusion: A Calculated Bet

Broadcom's stock remains a buy for investors who believe in the long-term trajectory of AI-driven infrastructure. The company's technical leadership, strategic partnerships, and robust revenue growth justify a premium valuation, particularly in a sector where innovation often outpaces traditional metrics. However, the current multiples-while supported by strong analyst ratings-reflect a market that is pricing in a significant portion of future growth. For conservative investors, the stretched EV/Sales and forward P/E ratios may warrant caution, especially in a landscape where competitors like TSMC and Nvidia offer more balanced risk-reward profiles.