UBS has maintained a Buy rating on Broadcom Limited (NASDAQ:AVGO) and kept its price target at $475.00, while calling attention to how the company’s semiconductor business is valued relative to peers.
Valuation snapshot - UBS noted that Broadcom’s semiconductor segment is trading at roughly 20x price-to-earnings, 23x enterprise value-to-free cash flow, and 17x enterprise value-to-EBITDA. Each of those multiples is one turn higher than comparable metrics for NVDA and the broader peer group, according to UBS. At the company level, the stock is trading at a P/E of 67.66. UBS also observed that Broadcom’s PEG ratio of 0.24 may indicate the premium valuation is more palatable once growth prospects are factored in.
By contrast, InvestingPro analysis referenced in the report flags Broadcom as appearing overvalued relative to its Fair Value estimate.
Software multiples and recent performance - UBS pointed to a correction in software multiples as a contributing factor to Broadcom’s lagging stock performance. The firm outlined material risks to Broadcom’s software franchise tied to customer behavior and product lifecycle timing.
One explicit risk UBS identified is the potential for increased churn among VMware customers in 2026 and 2027 as a wave of three-year contracts reaches renewal. That timing introduces the possibility of revenue pressure if a meaningful share of customers choose not to renew or reduce spend.
UBS also cited growth headwinds related to the company’s VCF upsell - noting that the incremental revenue opportunity from that program is being lapped - and the impact of AI coding tools that compress development and application modernization timelines. Those tools can accelerate migration of on-premises workloads to the cloud, which UBS sees as a factor that could alter Broadcom’s software consumption patterns.
Product and legal updates - Broadcom has launched the BroadPeak chip, a semiconductor aimed at advanced 5G and 6G network use cases. The device is manufactured on 5nm CMOS technology and is advertised as delivering up to a 40% reduction in power consumption versus existing solutions.
On the legal front, a German court ordered Renault to stop selling its Megane and Clio models after a patent dispute with Broadcom concerning ethernet network cable connections.
Analyst activity - The analyst landscape around Broadcom has been active. DA Davidson initiated coverage with a Neutral rating, citing concerns about Broadcom’s long-term position in the AI ASIC market. UBS reiterated its Buy stance and forecasted increased shipments of Broadcom’s TPU products in the coming years. Jefferies also reaffirmed a Buy rating, highlighting Broadcom’s strong position in AI and networking markets.
Taken together, these developments depict a company balancing premium semiconductor multiples, software exposure with renewal timing risks, new product introductions, and legal challenges.
Where to find more - For investors seeking deeper valuation and growth analysis, the Pro Research Report for Broadcom is available through InvestingPro, alongside reports for more than 1,400 other U.S. equities.