Is Now the Time to Buy Broadcom (AVGO) Amid Strong Institutional Buying and Insider Selling?

The stock of Broadcom (AVGO) has been a focal point of market attention in Q3 2025, as it navigates a complex interplay between robust institutional confidence and notable insider selling. With the company's AI-driven growth trajectory accelerating and institutional investors maintaining a heavy hand in its shares, the question remains: Is this a moment of opportunity, or a cautionary signal?

Institutional Confidence: A Fortress of Ownership

Broadcom's institutional ownership remains a cornerstone of its market narrative. Despite a 28% reduction in its stake by the Illinois Municipal Retirement Fund-selling 97,351 shares and retaining $69.09 million in AVGO-the fund still holds the stock as its seventh-largest position, representing 0.9% of its portfolio. This partial divestment, however, contrasts with broader institutional enthusiasm. Firms like Nuveen LLC and T. Rowe Price significantly increased their holdings in Q1 2025, with Nuveen investing $6.65 billion and T. Rowe boosting its stake by 37.8%. Such moves underscore confidence in Broadcom's dual-engine growth model, driven by AI semiconductors and software licensing.

The company's financial resilience further solidifies this optimism. Fitch Ratings upgraded Broadcom to BBB+ in September 2025, citing its strategic focus on AI chips, $15–$20 billion annual free cash flow projections, and the successful integration of VMware. Meanwhile, Broadcom's Q3 earnings report-delivering $16 billion in revenue (up 22% YoY) and $7 billion in free cash flow)-cemented its status as a market leader. AI-related revenue surged 63% to $5.2 billion, with a $10 billion AI chip order from a major customer and a $17.4 billion Q4 revenue forecast.

Insider Selling: Caution or Coincidence?

While institutional investors remain bullish, insider activity tells a different story. In Q3 2025, Broadcom insiders sold 664,471 shares worth $225.2 million, dwarfing their $1.23 million in purchases. Director Henry Samueli alone offloaded 368,797 shares for $124.6 million, while Justine Page sold 800 shares for $280,120. Such concentrated selling raises questions about insider sentiment, particularly in a stock that has surged to multi-year highs.

Yet context is critical. Insider selling is not uncommon in high-performing stocks, especially when executives or directors diversify their portfolios. Broadcom's management has consistently emphasized long-term growth, with CEO Hock Tan noting "continued customer investments in AI" as a key driver for fiscal 2026. The recent $10 billion OpenAI partnership, which spurred an 8.34% stock jump to $368.58, further aligns with this vision. Analysts remain overwhelmingly positive, with 90% of ratings favoring "Buy" and price targets ranging from $300 to $460.

Weighing the Signals

The tension between institutional confidence and insider selling hinges on one key factor: fundamentals. Broadcom's AI semiconductor business is expanding at a 66% YoY growth rate, while its software segment continues to compound revenue at a pace exceeding Wall Street expectations. These metrics suggest that insider selling may reflect personal financial decisions rather than a lack of faith in the company's prospects.

Moreover, the market's reaction to Broadcom's Q3 results and strategic partnerships-such as the OpenAI deal-indicates that investors are prioritizing long-term potential over short-term insider activity. The TCW Transform Systems ETF (PWRD), which includes AVGO as a top performer, saw inflows driven by Broadcom's guidance and AI momentum.

Conclusion: A Calculated Bet

For investors, the decision to buy Broadcom hinges on a nuanced assessment. Institutional ownership and earnings strength paint a picture of a company well-positioned to capitalize on the AI revolution. However, insider selling-particularly at the director level-warrants scrutiny. That said, the broader market's enthusiasm, coupled with Fitch's credit upgrade and analyst optimism, suggests that the positives outweigh the cautionary signals.

If the stock corrects in the near term, it could present an attractive entry point for those aligned with Broadcom's long-term vision. But for now, the data leans toward a "Buy" recommendation, provided investors remain mindful of the insider activity as a potential near-term risk.