Broadcom’s AI Windfall Faces Scrutiny as Shareholders Question Pay

Broadcom’s annual shareholder meeting on April 20 was a study in contrasts. While investors overwhelmingly backed the re-election of the board and the reappointment of auditor PricewaterhouseCoopers, a significant minority voiced discontent. Approximately one-third of the votes cast rejected the company’s executive compensation plan, a notable protest for a firm whose stock has soared over 128% in the past year.

The dissent appears focused on the pay package for CEO Hock E. Tan. According to proxy filings, more than 90% of his compensation is variable and equity-based, including multi-year performance stock units designed to extend his leadership role through fiscal 2030. This structure, explicitly aimed at long-term incentives, still failed to win over a substantial block of shareholders. The vote against director Harry L. You, with roughly 950 million shares opposing his re-election, further highlighted underlying tensions.

Operational results, however, provide a powerful counter-argument for the current strategy. The company’s financial engine is firing on all cylinders, driven overwhelmingly by artificial intelligence. In the first quarter, Broadcom generated AI-related revenue of $8.4 billion, a staggering 106% increase year-over-year. Profitability metrics are equally robust, with an adjusted EBITDA margin of 68% of revenue and a free cash flow margin of 41%.

This momentum is expected to continue. For the second quarter, management forecasts total revenue of $22 billion, representing 47% annual growth. Within that, AI semiconductor revenue is projected to climb to $10.7 billion. The foundation for this surge is a colossal AI order backlog exceeding $73 billion, a key detail that has captivated Wall Street.

Should investors sell immediately? Or is it worth buying Broadcom?

Analysts remain bullish. Vijay Rakesh of Mizuho Securities reaffirmed a Buy rating with a $480 price target, citing a growing pipeline for custom chips and a significant deal with AI developer Anthropic. The stock currently trades around €345.15, just 4% below its 52-week high, with a Relative Strength Index above 70 indicating sustained upward momentum.

Such explosive growth commands a premium valuation. Broadcom trades at a price-to-earnings ratio of nearly 76, significantly above the US semiconductor industry average of 47. This lofty multiple leaves little room for error. Any reduction in orders from major customers or increased margin pressure could trigger a swift correction.

Looking further ahead, Broadcom has set an ambitious long-term goal: to deliver $100 billion worth of custom AI chips to customers in fiscal 2027. The next major test of this trajectory comes on June 3, 2026, when the company reports its second-quarter earnings. For now, the staggering AI backlog fuels investor optimism, even as a vocal segment of shareholders questions the cost of the leadership delivering it.