长期持有AVGO，预计未来五到十年股价将进一步上涨。

I would like to inform you that I am receiving a lot of questions about Broadcom at the moment . Not only because I am a shareholder, but more importantly, they announced their profits this week, which seems to have terrified investors and prompted them to sell their shares.

The stock has not only lost more than 5% this week , but was even lower earlier today, and has lost about 30% of its value compared to its highest level . So, what is driving this kind of intense selling of the stock here? Were those profits really as bad as Wall Street tries to portray them?

Could this be a classic value trap waiting to ensnare greedy investors ? Or is this just another great dip buying opportunity for a fully operational AI giant ? Warning, I lean more towards the second side of that argument, the optimistic side.

But to understand why Wall Street is overreacting to Broadcom's business performance , you must first understand what they actually do and why they have strong economic backbones that make investing in them worthwhile.

But Broadcom operates a little differently. They act as a sort of " king" in their own field when it comes to custom ASIC chips, or what are known as application- specific integrated circuits. When you look at the world’s biggest technology giants such as Google, Meta, OpenAI, and others, they tend to have very specific and specialized AI workloads. Because of this, instead of relying too heavily on off- the-shelf devices that can become very expensive and consume a lot of power when scaled up, they sometimes turn to Broadcom and say, "Help us design our own AI accelerators ."

Broadcom then participates in the design of the chips, handles a large part of the complex packaging operations , and also provides access to manufacturing plants to build them completely. The reason this type of business has a strong competitive advantage is that once the tech giants start building their multibillion-dollar data centers around custom Broadcom chips , the costs of switching can be prohibitively expensive and difficult for them.

You simply wouldn't want to go and remove all your custom infrastructure that you spent a long time building overnight, for another option that you would of course be even less familiar with. This does not mean that Broadcom is not diversified in many other areas as well. For example, they are a huge force when it comes to AI networks , where they solve a major obstacle to AI communication speeds .

They even have a huge recurring enterprise software division based on VMware, which they acquired , and which generated nearly $9 billion , specifically $8.8 billion, in the last quarter alone.

But it is this comprehensive package that makes Broadcom an attractive long-term investment, in my words . Well, that amazing competitive advantage also translates into equally impressive financial results in terms of revenue and profits.

This last quarter, although it caused the stock to fall, was actually another exceptional quarter for them, and a strong report that, in my opinion, should have pushed the stock higher, not lower .

In terms of revenue, sales reached nearly $30 billion, representing a massive 86% year-on-year increase. This is insane growth for such a huge size already. Even better , adjusted operating income also came in above $20 billion , representing a massive 92% year-over- year growth.

Even their free cash flow reached $13.7 billion , which represents about 46% of their total sales. I mean, this company is currently experiencing tremendous success . In fact, the most important metric of all, and the one everyone pays close attention to , is AI semiconductor revenue, with this sector alone generating $16.7 billion during the quarter.

And if you think that's impressive, it's been a tremendous growth for this size, with over 220 % year-on-year. Shipments of dedicated accelerators, which we just talked about as a game-changer for Broadcom, have grown more than three and a half times compared to last year, accounting for 73% of those AI revenues.

In other words, they are expanding much faster than almost anyone expected, especially a few years ago. I mean, that's when I started buying large amounts of this stock myself, and I remember getting some criticism for it, but look now at what this company is achieving and how it has led to all these huge gains in the stock in recent years.

Yes, I am completely satisfied with my decision to buy at those extremely low levels years ago, and I am now able to reap the rewards and I am still looking forward to more and more in the future.

But if all the news about Broadcom is so good and impressive, why is the stock price actually falling, at least in the last few months and even after such strong results?

Well, it all comes down to Wall Street's obsession with future guidance, as Broadcom told the market that it expects its revenue in the next quarter to be around $34.8 billion . The problem is that analysts were expecting closer to $35 billion instead . In other words, we are talking about a small deficit of approximately $200 million out of a base of $35 billion. I mean, guys, that's a deficit of less than 1%.

At any other time , a company with such brilliance and amazing growth, despite its huge size, would not have any problem with such a small difference in guidance, which may simply be a deliberate move by Broadcom to lower expectations so that it can easily surpass them later when the actual results are announced.

But, because AI stocks, including Broadcom, have made huge gains in recent years, almost all of them are under scrutiny at the moment , especially with all the capital expenditure and even with rising input costs such as memory.

This is something that, in the case of Broadcom, the company will not be immune to either. In fact, they anticipated a slight decrease in profit margins due to all the high-bandwidth memory they need for the custom AI chips they manufacture, which of course are becoming more expensive day by day. I'm talking about memory.

But in my opinion, all of this is being blown out of proportion . Broadcom's profit margins still look great to me , and with all this increased demand, I'd rather they spend more of their money to meet orders and maintain supply levels, rather than halting production just so Wall Street doesn't panic over a slight drop in margins.

I prefer that they devote all their efforts to what will bring them this great success. During the earnings call, CEO Hock Tan surprised the market with what could be considered a $230 billion bombshell. Instead of providing guidance for just the next three months, they unveiled their plan for the next four years , projecting that their AI semiconductor revenue will reach $115 billion by fiscal year 2027. They then expect that figure to more than double again to $230 billion by fiscal year 2028, with earnings per share expected to reach $30 in the same year as well.

I mean, if they achieve that, we're talking about astronomical figures. I mean, you will be facing a future price-to-earnings ratio of approximately 10 . Perhaps a little more than that , but we're talking about this range. This is ridiculously cheap for a company like this . It is very low compared to the stock's level today and the company's amazing performance.

In fact, that is also why their PEG ratio , which takes future growth into account, is interesting. Note that this was based on the old projections, not these new higher ones, but even with the old ones, their ratio was less than 0.7. I mean, that's less than half their average over the past five years . In other words, investors usually accept more than double the current valuation, but we are talking about half of that here.

Because of all this incredible growth, it is now 40% lower than the sector average as well. I mean, in what world do you find a company that is so successful, leading the market in so many ways, and yet you can get it at a 43% discount compared to the sector and competitors? This is very attractive.

Again, all of this comes primarily from their progress in custom AI chips. For example, Anthropic is set to deploy 5 gigawatts of Broadcom 's next-generation TPU chips by 2027, and another 10 gigawatts by 2028.

OpenAI is looking to deploy 1.3 gigawatts of its own custom Jalapeno chips by 2027, and more than 5 gigawatts by 2028. Google is set to purchase tens of billions of dollars' worth of custom processors every year for the foreseeable future.

Even Meta is partnering with Broadcom to increase production of its AI accelerators , which are specifically designed to power the giant recommendation engines, to act as the basis for the hidden algorithms behind social media platforms , such as determining which videos and ads will appear to you later.

There are many other important partnerships as well, but management claims it has already secured the supply chain, chips, substrates, and memory to meet all this enormous demand in the coming years. Especially in 2027 and 2028, where they expect things to grow beyond expectations.

They are also building a piling facility in Singapore next year, to help alleviate some of the supply bottlenecks even further. In other words, they have a backlog of orders and long-term contracts, and all they need now is the actual execution to turn this into tangible revenue, which I think they have done a great job at so far, and I see no reason to question them. At least, not yet.

I was very impressed with everything they offered. I understand the fear of an AI bubble bursting , or that if there are any stumbles in capital spending cycles or implementation problems, it could lead to a major correction, but in my view, this will affect the entire market anyway, and overall, I haven't seen enough evidence to lead me to believe that Broadcom specifically will fail to implement.

There is always a risk of macro-level headwinds that could harm these types of stocks, and that's obvious. But again, if we look at it from the company's perspective, I am very impressed with Broadcom's performance, and they have given me no reason to doubt them, at least so far.

Therefore, I plan to hold my shares for the long term, even though I have already made significant profits , but I still believe the stock can rise further over the next five to ten years. But what do you think? Is this a stock you would buy now when its price is low, or is there too much risk involved with similar AI stocks in the market?