Broadcom (NASDAQ:AVGO) has spent much of 2026 watching the broader market leave it behind. Shares are up just 4.5% year-to-date, compared with a roughly 13% gain for the S&P 500, an unusual showing for a stock that has been one of the biggest beneficiaries of the AI boom in recent years.
The sluggish performance has little to do with Broadcom losing its place in the AI race. If anything, the problem has been just how much investors already expected from it. That became especially clear in June, when the stock tumbled after Broadcom left its fiscal 2027 AI revenue forecast unchanged at $100 billion rather than lifting it. The company has since raised that outlook to roughly $115 billion.
Broadcom’s rapidly expanding custom AI accelerator business is also putting pressure on the company’s gross-margin mix as XPUs account for a larger share of revenue. Add growing competition for custom AI chip contracts, and Broadcom has found itself in the position of delivering extraordinary AI growth without getting much credit for it in its share price.
That gap between what Broadcom is delivering and what its stock has done has caught the eye of top investor Andres Cardenal, who ranks among the top 2% of stock experts on TipRanks. Rather than seeing the stock’s recent stagnation as evidence that Broadcom’s best days are behind it, Cardenal believes current prices have created an opening for investors willing to think beyond the next few quarters.
“The timing for a recovery is always uncertain, but the risk-to-reward tradeoff for long-term investors is clearly convenient at these prices,” Cardenal says.
His conviction goes well beyond expectations for another AI-driven rally. Cardenal views Broadcom as a particularly high-quality operator within the chip industry, pointing to its financial strength, competitive advantages, and avenues for expansion. As he puts it, Broadcom is “one of the best companies in the semiconductor industry in terms of financial performance, competitive moats, and growth opportunities.”
A large part of that case comes down to what Broadcom has assembled over the years. Acquisitions have expanded its technology portfolio, while custom AI accelerators and networking have placed the company deep inside the infrastructure being built by some of the world’s largest tech companies. Cardenal gives management considerable credit for that evolution, arguing that its acquisition strategy has put Broadcom “in the right position to capitalize on exponential growth opportunities.”
The relationships behind those products may prove just as important as their growth rates. Broadcom has worked with Alphabet on its TPUs for more than a decade and has relationships with Meta, OpenAI, and Anthropic. Custom chips are developed closely with customers and become intertwined with software, networking, cooling, and other parts of their computing systems, making those partnerships harder to displace once established.
Then there is valuation. Cardenal argues that current earnings estimates may not capture the full picture, particularly given Broadcom’s history of exceeding Wall Street forecasts. If that continues, the investor says, “the stock is actually cheaper than it seems to be from a static standpoint.”
That leaves Broadcom in an interesting position heading into the remainder of 2026. Cardenal isn’t trying to predict exactly when the stock catches up. His case is that investors willing to wait may be getting access to Broadcom’s next phase of growth before the share price fully reflects it.
“It is impossible to know when the current correction or consolidation affecting semiconductor stocks is going to end, but Broadcom is currently offering a convenient entry point in an industry leader with outstanding fundamental quality and abundant potential for long-term growth,” Cardenal summed up, assigning AVGO shares a Buy rating. (To watch Cardenal’s track record, click here)
Wall Street is also leaning bullish on Broadcom. Among 30 analysts covering AVGO, 27 recommend buying the stock and 3 remain on the sidelines, giving it a Strong Buy consensus rating. The average 12-month price target of $519.21 points to about 42% upside from current levels. (See AVGO stock forecast)
Disclaimer: The opinions expressed in this article are solely those of the featured investor. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.