As of today, Broadcom's marketcap is roughly 1.8T (it's closer to 1.9T but still) Nvidia's marketcap in comparison is roughly 4.3T This brings Broadcom at about 40% valuation of Nvidia
Now Broadcom made about 15.9 B dollars in profit, for a 4.2 B in Net Revenue.
About 9.2 B ( \~ 60%) comes from Semiconductor related business And the rest, 6.8 B (\~ 40%) comes from Software
Now Broadcom bought VMware and increased prices by a lot, so much that they gained a lot of ill-will, and those who can try to get out of their ecosystem. They are taking a page out of Oracle's book, and this will hold companies hostage for a while, but the price increases are so insane, going up to 10x, that some companies either must find an alternative, or risk going bankrupt. \[1\] \[2\]
I believe, Broadcom will stagnate in growth in their software department, but will increase prices to bleed dry existing customers as much as they can, the issue is in the VM space, there are some big players, such as Microsoft and already existing open source projects such as ProxMox that is gaining tractions \[3\]
But This isn't what I want to talk about, and this isn't the reason for their latest rally, it's their semiconductor division, and the latest google TPU Meta deal.
Broadcom has a gross margin of roughly 67% I am going to reasonably assume that they have a way higher margin on their software division compared to their chips division. I am going to assume a reasonable, yet very optimistic gross margin of 60% on their chip divisions, slightly higher than what Qualcom or Marvel gets, which designed and helped fab Amazon's AI chips. This leaves roughly 75% gross margin for their software division. I believe their software margins are way higher, and their chip divisions are lower but it doesn't matter.
Their operating margins are way lower, at 26%.
So on purely current revenue and profitability, I am going to compare to Nvidia's Q2 to make it fairer, since they have more than 2 months delay between their earnings.
in Q2 Nvidia had a gross revenue of 45 B, or almost 3x (2.9x) Broadcom's Q3 revenue In Terms of Net Income Nvidia did 26.4B, which is even more drastic of a difference compared to Broadcom's 6.2x !
So this puts proportionally Broadcom at 40 % valuation of Nvidia, does 34 % Gross Revenue, But 16 % Net Revenue
For the sake of the argument, If Nvidia went full panic mode, and decreased their insane margins to undercut Broadcom, at 20% margins, Nvidia would still do 9B in revenue, which is more than 2x what Broadcom does now.
Now in terms of the future, they helped design googles TPUs but google owns the IP. And in the openAI deal, openAI is to design and own the IP (And Microsoft will also have rights due to their arrangements, so Broadcom will be paid to help the design and in the manufacturing, but they aren't going further than this.
EDIT 1 Growth:
I wanted to add a section on growth,
Q3 saw a 6 % growth overall from Q2 and a 22% YoY
In terms of the Chip division, it saw a roughly 9% increase from Q2
Their own projections for Q4 expect a 9 % growth from Q3
This is below both nvidia's and AMD Q/Q growth
This is why Broadcom only shows YoY growth and not Q/Q like AMD or Nvidia, to make their growth look better.
Based on this, Broadcom would have to 6x their semiconductor revenue in 2026 to justify their current valuation, which does not reflect at all their current growth.
Current projections include existing google TPU demand, so even if you double it to include say openAI demand, it is still not realistic to hit such levels.
EDIT 2 Debt:
Broadcom also has lots of debt, they took a bit of short term debt, a small increase from 2024 at 1.4 B
But they also have a 62 B long term debt
Even if they are decreasing debt from 2024, they still have a an insane debt to revenue as well as equity ratio.
Both AMD and Nvidia have proportionally way less debt.
1: [https://www.networkworld.com/article/3994107/vmware-customers-in-europe-face-up-to-1500-price-increases-under-broadcom-ownership.html](https://www.networkworld.com/article/3994107/vmware-customers-in-europe-face-up-to-1500-price-increases-under-broadcom-ownership.html)
2: [https://www.forte-systems.com/blog/vmwares-price-revolution-how-broadcoms-changes-are-reshaping-mid-market-it-strategy](https://www.forte-systems.com/blog/vmwares-price-revolution-how-broadcoms-changes-are-reshaping-mid-market-it-strategy)
3: [https://cybernews.com/security/vmware-users-flee-to-proxmox-but-forget-updates/](https://cybernews.com/security/vmware-users-flee-to-proxmox-but-forget-updates/)
