Buffett Brain · Research note
Score updated 26 Sept 2026 · analysis from 1 Jun 2026
AVGO· Technology
Broadcom
Broadcom is a wonderful chip and software toll booth carrying a punishing 84.8 times earnings price tag.
Buffett fit
Partial fit
Owner
68
Durability
70
Management
71
Price
0
Score updated 26 Sept 2026 · analysis from 1 Jun 2026
Buffett's checklist
Each number against Buffett's bar, and where it ranks among Technology stocks in our database.
How much profit the business makes on each dollar invested in it. Higher is better.
What is left of each sale after the cost of making the product. A high number often means pricing power.
The cash the business earns for its owners, compared with the price of the whole company.
How fast sales grew each year over the last five years.
How many years of today's profit you pay for at today's price. Lower means cheaper.
How much the company owes compared with what it owns outright. Lower is safer.
The four pillars
How the business measures up on each of Buffett's four tests.
If I owned all of Broadcom, I would admire the machine and wince at the entry price.
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The networking and infrastructure software pieces are sticky, with switching costs that keep customers in place and support a 67 percent .
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Management has compounded earnings per share at 33 percent while letting the share count creep up about 3.5 percent a year, so growth has come with some dilution and a great deal of debt-funded dealmaking.
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There is none worth the name. An owner-earnings yield of 1.27 percent and an earnings yield of 1.18 percent mean you are handing over roughly eighty cents of price for every penny of current , and EV to of 85 says the table over there agrees.
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For and against
The strongest points on each side, with the numbers behind them.
In its favor
6- 1Fat margins, with a 67 percent and a 41 percent , the mark of a business selling something hard to copy.
- 2Strong returns on capital, with trailing of 17.6 percent well above the cost of the money it uses.
- 3Rapid growth, with revenue 23.5 percent and earnings per share compounding 33 percent a year.
- 4Honest cash, with at 1.16 times net income, so the reported profit converts to real money.
Concerns
6- 1The price is the whole problem, at 84.8 times earnings with an owner-earnings yield of just 1.27 percent and EV to of 85, which is why valuation scores a zero.
- 2Fragile in a downturn, with earnings per share having fallen 62.5 percent in a prior cyclical trough.
- 3Customer and product concentration in AI accelerators, where a handful of buyers can move the whole order book.
- 4 from serial acquisitions, with debt to equity at 0.83 funding much of the growth story.
Price history
$355+620.5%· 5-year return
Weekly closing prices. Touch or hover the line for a date.
The business
How the business works
Broadcom sells essential semiconductors for networking, custom AI accelerators, broadband and storage, and bolts on a large infrastructure software arm built through acquisition. The economics are excellent, with a 67 percent and a 41 percent , and the top line has compounded at roughly 23.5 percent a year. It earns by selling parts that are small in cost but indispensable to the customer's product, and by collecting recurring software licenses with high switching costs.
How this analysis has moved
The call has held across 2 reviews.
Sep 27, 2026 → Oct 4, 2026
What other investors would say
The same company, judged by three other documented playbooks.
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