As Broadcom Shares Slide, Is AVGO Stock a Buy on the Dip?

After a strong rally, Broadcom (AVGO) stock has come under pressure, dropping 20% from its 52-week high of $414.61. Broadcom is a key supplier of semiconductors, enterprise software, and security solutions, and the company continues to benefit from solid demand tailwinds. In particular, the company's artificial intelligence (AI) focused semiconductor products are seeing significant momentum, while adoption of VMware Cloud Foundation (VCF) has been strengthening its infrastructure software business.

The main concern weighing on AVGO shares is profitability, particularly gross margins. Management recently projected that first-quarter consolidated gross margin could decline by 100 basis points sequentially. This is largely due to a higher mix of AI-related revenue, which carries lower margins compared to Broadcom’s software business.