$AVGO

Explicit claim • strong conviction • basis: fair value gap

I think it's a bargain. I calculated a fair value at $506 earlier this year.

Explicit claim • strong conviction • basis: market mispricing

He's saying chips are overvalued

Explicit claim • strong conviction • basis: multiple relative

But again, I'm more than happy with this 300% plus returns on AVGO and Arista as well. On the three-year annualized growth, we see why Astera has done so well here with sales up 120% a year, more than four times the pace of growth at its competitors. On a forward basis, Astera is still expected to keep up a very strong 77% revenue pace. Arista isn't too bad here at 27% pace, but what interests me here is Broadcom's forecasted sales growth of almost 50% as it starts really coming through with those TPU chip deals with the hyperscalers. In profitability, we see that Astera is really spending for that growth. So sacrificing a little bit more on that near-term profits. Broadcom and Arista though have really strong profitability given their growth. AVGO in particular at 55% margin, especially considering that 50% pace of revenue growth. Here I was surprised that shares of Arista were trading so expensively on that price to earnings adjusted for growth basis. Basically even with Astera Labs. I do like Astera's revenue growth, but here the profitability, the growth, and that rock bottom valuation of just 68 times on a PEG basis makes Broadcom the clear buy of these three.

Explicit claim • strong conviction • basis: multiple relative

By all three metrics, Broadcom looks to be a little bit overvalued, at least based on its historical valuation.