BakerAvenue’s chief strategist King Lip views Broadcom Inc (AVGO) as a “top pick” heading into the chipmaker’s Q3 earnings scheduled to be released on September 2nd after market close.
Consensus is for AVGO to record $29.43 billion in revenue on $3.24 a share of earnings (EPS) – representing an 84.5% and 91.7% year-on-year growth on the top- and bottom-line.
Heading into the quarterly print, Broadcom stock is down over 25% versus its year-to-date high.
Lip’s constructive view on Broadcom Stock
Speaking recently with CNBC, King Lip pinpointed a fundamental shift underway within artificial intelligence infrastructure spending.
According to him, the market is evolving away from initial model development toward real-world application deployment.
“We see the tech trade as moving away from, you know, show me the model, if you would, to show me the money,” the strategist noted.
King Lip believes industry workloads are rapidly moving from AI training toward inference, where tailored chips execute dedicated, repetitive tasks at scale.
Within this second phase of hardware deployment, he sees AVGO stock holding distinct structural advantage over traditional GPU-focused market leaders.
Note that Broadcom does also pay a dividend yield of 0.71%, which makes it even more attractive as a long-term holding.
Why AVGO shares are attractive ahead of Q3 earnings
While Nvidia has dominated foundational model training, Broadcom Inc represents a key vehicle for custom application-specific integrated circuits (ASICs) and long-term inference demand.
“Nvidia has been great for training models, but for huge repetitive type workloads, AVGO is our top pick for the next evolution in custom AI chips and inference play,” Lip explained.
Crucially, Nvidia doesn’t really have to lose in order for Broadcom to win in the AI chips space – he added.
Investors should note, however, that AVGO shares currently sit below their major moving averages (MAs), indicating bears are firmly in control across multiple timeframes heading into its earnings event.
How Wall Street recommends playing Broadcom
While macro rate pressures and broader AI revenue quality remain industry-wide concerns, AVGO’s core thesis hinges on resolving physical execution bottlenecks and warding off emerging rivals.
King Lip emphasized that mounting political friction around data center construction, such as local power grid constraints and community moratoria, presents a major operational hurdle for hyperscale buildouts.
However, Broadcom’s dominance in high-efficiency networking silicon and custom ASICs gives it a direct path to capture demand as cloud giants seek lower-cost, tailored alternatives to generic GPUs.
As lower-cost open-source models gain traction, Broadcom stands uniquely positioned to monetize the transition toward targeted inference infrastructure without needing market share losses from GPU leaders to fuel its growth.
Note that Wall Street analysts remain bullish as ever heading into AVGO’s quarterly release. The consensus rating on Broadcom shares is set at Buy with a mean price target of $534, according to The Wall Street Journal.
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