Broadcom’s $73 Billion Backlog Shields Against Stretched Valuation

The semiconductor giant’s stock took a breather on Friday, slipping 2.23 percent to €352.40, after a blistering run that saw shares nearly double over the past twelve months. The pullback comes as little surprise — the Relative Strength Index has climbed to around 68, flashing early warning signs of an overbought market. Yet the broader uptrend remains firmly intact, with the stock trading a comfortable 20 percent above its 50-day moving average, a gap that has effectively neutralized any bearish crossover signals that had worried traders.

A Deepening Cloud Alliance

The latest catalyst came from Google Cloud Next, where the two companies unveiled “Cloud Network Insights,” a service built on Broadcom’s AppNeta technology designed to root out network faults in hybrid cloud environments. More significantly, Broadcom has secured a long-term commitment to develop custom Tensor Processing Units for Google through 2031, cementing its role as a linchpin in the search giant’s AI infrastructure.

This deepening partnership comes as Broadcom rides a historic wave in the semiconductor sector. The Philadelphia Semiconductor Index (SOX) recently strung together 17 consecutive winning sessions — a feat not seen in over three decades. Against this backdrop, Broadcom shares hit a fresh all-time high of €360.45 on Thursday, translating to a 118 percent gain over the past year.

Backlog Provides a Safety Net

Behind the price action lies a formidable order book. Management confirmed that open contracts total $73 billion, with the bulk scheduled for delivery over the next 18 months. This visibility into future revenue is a key argument for bulls who argue the stock’s elevated valuation — the price-to-earnings ratio now stands at a punchy 82 — is justified by the predictable cash flows from AI infrastructure buildout.

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

The company’s first-quarter results underscored the momentum: AI chip revenue doubled to $8.4 billion. Analysts point to this recurring growth as a de-risking mechanism for what would otherwise look like an overheated stock.

Shareholders Back the Board

At the annual general meeting, investors voted overwhelmingly for continuity, re-electing all eight board members and approving the management’s performance-linked compensation package. The message was clear: shareholders are comfortable with the strategic direction, even as the stock trades at lofty multiples.

Wall Street remains broadly constructive. The consensus rating is “Moderate Buy,” with a range of ambitious price targets:

• JP Morgan: Overweight, $500 target
• Benchmark: Buy, $485 target
• Mizuho: Outperform, $480 target
• Wells Fargo: Overweight, $430 target

The Next Catalyst

All eyes now turn to June 4, 2026, when Broadcom reports second-quarter earnings. The market is modeling revenue of approximately $22 billion, which would represent a 47 percent year-over-year surge. For a company already trading at 82 times earnings, those numbers will need to deliver — and the $73 billion backlog suggests they just might.