5 Reasons to Buy Broadcom Stock Before Its Sept. 2 Earnings

Broadcom’s Sept. 2 earnings report is flagged as a potential catalyst after shares cooled in 2026, with the bull case centered on AI custom chips (TPUs) and a growing inference opportunity. The article cites Alphabet’s TPU framework (including $21B in Anthropic TPU orders and future commitments), OpenAI’s Jalapeño inference chip deployment starting by year-end, and Broadcom’s $200B HBM/manufacturing supply deal with Samsung through 2030—supporting a multi-year custom-chip growth moat. It also argues valuation support, noting Broadcom trades at a forward 18x P/E for fiscal 2027, implying upside if Q3 results and September guidance come in upbeat.

Analysis

AVGO looks less like a simple AI beneficiary and more like a control point on the scarce inputs that determine who can actually ship custom silicon at scale: advanced packaging, HBM access, and foundry slots. That makes the earnings setup asymmetric — the stock can re-rate if management proves backlog is translating into multi-year committed revenue, but it can also de-rate fast if guidance implies any of those bottlenecks are loosening or if customer concentration is higher than the market is modeling.

Second-order winners are the bottleneck providers that sit upstream of custom chips, especially TSM and SSNLF, because demand tied to ASIC programs is stickier than spot GPU demand and tends to pull through multi-quarter capacity reservations. The relative loser is NVDA only at the margin: not because training demand is weakening, but because more hyperscaler capex is migrating to purpose-built silicon for specific workloads, which compresses the growth ceiling on the most mature AI rack configurations over 6-18 months. MU is a more subtle beneficiary/loser — if HBM remains tight, pricing supports margins, but its smaller share of Korean capacity limits its participation in the fastest-growing custom-chip mix.

The contrarian risk is that the market may already be treating AVGO as the default winner in ASIC and optical networking, while underappreciating how quickly those margins can normalize if customers dual-source or internalize more of the stack. Near term, the key catalyst is earnings/guidance; over 1-3 months, watch whether capex commentary from GOOGL and AMZN confirms a broader ASIC wave, and over 6-12 months whether optical interconnect revenue actually scales or stays a design-win story. Falsifiers: any softness in forward bookings, a guide that implies mix dilution, or signs that capacity commitments are not converting into revenue fast enough.

On valuation, the setup is constructive but not a slam dunk — 18x forward earnings is cheap only if the market believes this is a sustained earnings compounding story rather than a one-cycle AI beneficiary. If execution is clean, the multiple can expand; if not, the stock can remain range-bound even with solid absolute growth.

Key Decisions for Investors

• Go long AVGO into earnings on a 1-4 week horizon; use the report as the catalyst. Reward/risk is favorable if management confirms multi-year AI backlog conversion, but fade the move if guidance does not outpace the already-bullish narrative.
• Pair trade: long AVGO / short NVDA for 1-3 months to express the view that custom silicon share gains will outgrow the premium GPU complex at the margin. Falsify if NVDA re-accelerates on Rubin or hyperscaler standardization stalls.
• Overweight TSM and SSNLF as upstream capacity beneficiaries over the next 6-12 months; they monetize the capex arms race regardless of whether AVGO or NVDA wins final chip share. Monitor any evidence of foundry or HBM capacity normalization as the main risk.
• For event-risk control, consider a defined-risk AVGO call spread rather than outright stock if implied vol is elevated. This keeps upside exposure to a post-earnings re-rating while capping downside if the market is already leaning too hard into the story.
• Set an alert on GOOGL and AMZN capex commentary over the next 1-2 quarters; if those budgets stay elevated while AVGO guides up again, the trade becomes a stronger structural long. If capex flattens, reduce AVGO exposure quickly.