Google's "Chatgpt Moment": Can AVGO Become the Market's Next AI Narrative
As $Alphabet-C (GOOG.US)$ rallies to fresh highs and its market cap flirts with $4 trillion, the chip quietly enabling its vast compute empire—the TPU—is finally getting its moment. And with that spotlight comes a new winner in the rotation: $Broadcom (AVGO.US)$ , the key silicon partner behind TPU design and development, now widely treated as one of the strongest “Google proxy” stock.
While the long-time “AI king” $NVIDIA (NVDA.US)$ has been sliding, Broadcom is pushing back toward record highs, with a technical breakout looking increasingly plausible. Here’s a fast primer on Broadcom’s story—and a few practical options trading angles.
1. The Origin Story: How Avago Became Broadcom
Today’s Broadcom is the result of a defining 2015 deal: chipmaker Avago acquired the original Broadcom Corporation using leverage, then the combined company kept the Broadcom name—while retaining the AVGO ticker lineage.
On the announcement day, Avago’s market cap was ~$34B versus Broadcom’s ~$28B—close in size. But because Broadcom carried the stronger brand, standing, and influence, the merged company adopted the Broadcom identity. For simplicity, I'll call the company “Broadcom” throughout—before and after the merger.
Avago itself traces back to Agilent’s semiconductor products group, which began operating independently after being acquired in 2005 by KKR and Silver Lake. Then came the pivotal leadership change: in 2006, Avago brought in Hock Tan (Tan Hock Eng) as CEO. He remains CEO today—and Broadcom’s signature playbook of scaling through acquisitions is closely tied to his tenure.
A few deals that shaped the current empire:
2017: Brocade (closed) — strengthened data-center storage networking, including Fibre Channel SAN assets
2018: CA Technologies (~$18.9B cash) — expanded into enterprise infrastructure software (mainframe/IT ops/management)
2019: Symantec Enterprise Security (~$10.7B cash; closed) — broadened security offerings and enterprise distribution
2023: VMware (closed; widely reported at ~$69B) — brought a major virtualization / private-cloud / hybrid-cloud platform under Broadcom, pushing software to the forefront
A key historical footnote: VMware’s ownership trail runs through $Dell Technologies (DELL.US)$ ’s 2016 mega-acquisition of EMC (~$67B)—with VMware originally acquired by EMC in 2004 for ~$625M. This transaction caused Dell severely indebted and had to de-risk the balance sheet in 2021, ultimately spinning off ~81% of VMware to Dell's own shareholders, supported by VMware’s large special cash distribution. By the time Broadcom acquired VMware in 2023, Broadcom’s headline price was only about 3% above Dell’s seven-years-prior EMC deal price—often cited as a window into Tan’s timing ability and deal discipline.
2. AVGO's Two Engines: Chips + Software
Broadcom reports two major revenue segments:
(1) Semiconductor Solutions — the chip business
(2) Infrastructure Software — the software platform built largely via acquisitions (CA, Symantec, VMware, etc.)
Within semiconductors, investors often frame the business as:
>> Communication / networking silicon, and
>> Custom silicon (ASICs)—frequently discussed in the AI context as XPUs
While Software is the other leg of the stool—and 2024’s software surge was primarily the result of VMware consolidation.
One important nuance: Broadcom doesn’t publish a clean accounting line for “networking chips vs. ASICs.” Instead, in FY2024 it disclosed AI vs. non-AI semiconductor revenue—with AI semiconductors at ~40% of total semiconductor revenue (~$12.2B). On the FY2024 Q4 earnings call, however, to show investors more details on AI chips development, Tan suggested that within AI, connectivity/networking consists roughly ~20%, implying the remaining majority (80%) comes from data centers (ASICs / XPUs).
If that mix holds (or rises) while total semiconductor revenue expands, then over time, the data-center chip sector could plausibly trend toward ~30%–35% of total company revenue—a meaningful level given the company also carries a sizeable software base.
Just as notable: Broadcom’s networking chips are critical plumbing for modern AI data centers, and its software stack can reinforce its silicon footprint. In other words, chips and software can “pull” each other together into larger platform value. So the comparison between CEOs of NVIDIA and Broadcom is interesting. Jensen Huang leans more “pure technologist,” while Tan operates more like a commercial octopus, extending reach across layers of the stack.
So much for the high-level overview. Now back to the trading.
3. The Setup: Street Numbers vs. New Narrative
The Street's consensus on Broadcom heading into 2026 has been roughly:
EPS estimate: ~$7.6
Average price target: ~ $400
But notice those expectations were largely anchored around prior-quarter assumptions—before Google’s latest re-rating and before TPU became a headline catalyst.
Then came the twist: reports suggested Meta signed an agreement to buy or rent TPU capacity from Google. Meta as Google's customer — hard to imagine or ignore.
After Broadcom surged +11% on the 24th, some firms quickly pushed targets higher. Examples cited in media coverage include: Melius Research raising its target to $475. Another cited move included a target lifted to $480, one of the most bullish on the Street at the moment.
Whether the upbeat tone holds likely becomes clearer at Broadcom’s Q4 earnings on December 11, which may offer more color on TPU-driven demand, custom silicon momentum, and AI networking pull-through.
4. Options Trade: It's IV That Matters
Broadcom’s implied volatility (IV) is currently above 50, noticeably higher than its historical “comfort zone” around 35–45. Elevated IV is exactly the kind of environment that often favors premium-selling (short-vol) approaches.
Even without owning shares, selling puts can be a flexible way to build exposure—getting paid while waiting and potentially acquiring stock at a better effective entry.
Technically, the stock is also coiling near highs. For aggressive traders looking to express a short-term upside breakout, ATM or slightly OTM long calls are a straightforward directional tool.
One caution: the broader U.S. tape remains volatile. To reduce risk and volatile, consider expirations of two months or longer, rather than very near-dated contracts.
Disclaimer: Community is offered by Moomoo Technologies Inc. and is for educational purposes only.
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ProTraderMark : With AVGO rallying on TPU hype, do you think it’s a better AI play than NVDA long-term, or is the valuation stretched
Rockyturki : How much of AVGO’s software surge is sustainable vs. just consolidation-driven?
Shaaaw : Thanks for the insightful breakdown on Broadcom's rise alongside Google's TPU!![[undefined]](https://static.moomoo.com/nnq/emoji/static/image/default/default-black.png?imageMogr2/thumbnail/36x36 "undefined")
74128907 :![[undefined]](https://static.moomoo.com/nnq/emoji/static/image/default/default-black.png?imageMogr2/thumbnail/36x36 "undefined")
![[undefined]](https://static.moomoo.com/nnq/emoji/static/image/default/default-black.png?imageMogr2/thumbnail/36x36 "undefined")
72418940 : When the AISC chip customization bubble bursts, we will know who has been swimming naked.
M7R :
104703786 : Thanks the ceo Mr. Tan(ex Malaysian) , you hv made broadcom a super great company
104088143 : How to
Eric102623128 :
AD HING : Bullish