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LivestreamMenuBroadcom sits roughly 50% below its average Wall Street price target while the AI infrastructure build-out continues to accelerate. At roughly $370, the stock is well below the consensus target (per analysts) in the low-to-mid $500s (strong buy rating across the Street). I believe this is one of the cleaner dislocations in the semiconductor complex right now. The market has been treating AVGO as a pure networking name and not necessarily as the dual-engine it is which also plays in the semiconductor arena. AI semiconductor revenue hit $10.8 billion in the most recent quarter (+143% year-over-year). Management guided $16 billion for the current quarter and reaffirmed $56 billion for the full fiscal year, with line-of-sight to more than $100 billion in AI semiconductor revenue in fiscal 2027. Roughly 40% of Broadcom recent AI revenue came from networking (Tomahawk switches and related silicon), and the rest from custom XPUs/TPUs for hyperscalers and frontier labs including Google, OpenAI and Anthropic. Broadcom does not need to win the GPU design race. It collects a toll whether customers buy merchant GPUs or design their own accelerators; then AVGO double dips on the high-speed Ethernet fabric that connects them at scale. The upcoming Sept. 2 earnings report for this nearly $2 trillion company is a near-term catalyst for those looking to capitalize on a rebound. Guidance on AI semiconductor trajectory and any incremental custom-ASIC commentary should matter more than the printed numbers themselves. With the stock already reflecting meaningful skepticism around multisourcing and competition, the risk/reward for a defined-risk bullish structure looks rather attractive relative to the absolute upside implied by the analyst targets. Implied volatility remains elevated after the recent pullback, creating an opportunity to sell and collect the expensive downside premium associated with puts and use that collected premium to offset an upside call option. The trade: Sold the 9/18/2026 $320 put for $6.25 Bought the 9/18/2026 $400 call for $9.50 This debit spread will cost an investor $3.25 or $325 per one lot AVGO was trading $367ish when this trade was established. This expresses my bullish view while trying to define and mitigate the downside. The short put requires willingness to own AVGO at $320 (roughly 12% below current levels), a level that would represent an even deeper discount to the Street’s average target. The long $400 call provides leveraged participation if the stock re-rates toward the $500+ zone that analysts are modeling on the back of the AI revenue ramp. The September regular expiration gives the September 2 earnings reaction room to play out without forcing an immediate binary decision. Unlike pure long calls, the short put meaningfully reduces the net capital outlay. Unlike a simple debit spread, the upside remains uncapped above $400 plus the $3.25 cost of the spread, so call it $403.25. DISCLOSURES: Kilburg currently holds a long position in AVGO in the Mango Growth ETF (GARY) that he manages. Kilburg also has this spread on. All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, or its parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.Read More
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