An AI Slowdown Could Hurt Semiconductors, But Here’s Why You Should Load Up on Broadcom Stock

An AI Slowdown Could Hurt Semiconductors, But Here’s Why You Should Load Up on Broadcom Stock Amit Singh Tue, September 15, 2026 at 1:30 PM GMT+2 4 min read AVGO The artificial intelligence (AI) boom has created one of the strongest growth cycles the semiconductor industry has seen in years. But as prominent AI executives begin calling for a more measured approach to developing increasingly advanced systems, the move could eventually ripple through the entire technology industry. For Broadcom (AVGO), this is bad news.

The company has been one of the biggest beneficiaries of the AI infrastructure buildout, with custom AI accelerators and networking products driving an extraordinary share of its recent growth. A meaningful slowdown in AI development could pressure demand for chips, networking equipment, and data center infrastructure. More News from Barchart Goldman Sachs Expects Fed Chair Kevin Warsh to Raise Rates This Week — But Not Because of Oil Prices.

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com Why AI Spending Matters for Broadcom Broadcom's latest results show how rapidly its AI business has expanded. Its AI semiconductor revenue surged 221% year over year and 54% sequentially, pushing consolidated quarterly revenue to $29. 6 billion, an 86% increase from the same period a year earlier.

Operating income grew even faster, rising 92% year over year, while the operating margin reached a record 68%. Custom AI accelerators, or XPUs, were the biggest driver. Broadcom's six XPU customers are accelerating adoption of custom-designed chips, and AI semiconductor revenue more than tripled year over year to $16.

7 billion. XPU shipments increased more than 3. 5 times year-over-year and accounted for approximately 73% of AI revenue during the quarter.

That is an impressive growth profile, but it also highlights the company's exposure to AI spending. Much of Broadcom's current growth is concentrated among a relatively small number of very large AI customers. If the largest AI developers slow model development or delay new data-center deployments, Broadcom could feel the effects quickly.

Customer Commitments Provide an Important Cushion While a slowdown in AI development poses challenges, there is an important distinction between AI growth slowing and AI demand disappearing. Even if hyperscalers and AI developers eventually moderate their capital spending, Broadcom enters such a scenario with significant customer commitments, a growing custom accelerator business, and a diversified revenue base. Story Continues Broadcom has long-term relationships with some of the industry's most important AI companies, such as Alphabet's (GOOG) Google, Meta Platforms (META), OpenAI, and Anthropic.

These relationships matter because custom accelerators are not simply commodity chips that customers can switch in and out of their infrastructure overnight. They are developed around specific workloads and require substantial engineering collaboration. Once a major customer commits to custom accelerator architecture, that relationship can extend across multiple product generations, creating a more durable revenue stream.

Looking ahead, Broadcom's AI semiconductor revenue is expected to maintain strong momentum, with projections suggesting that it could double year-over-year in fiscal 2027 and again in fiscal 2028. Even if AI-related spending moderates, Broadcom remains well positioned to generate substantial revenue growth in the years ahead. Broadcom Is Not All AI Investors should also note that Broadcom has a non-AI business.

Its non-AI semiconductor business generated $4. 2 billion of revenue in the recent quarter, up 5% year-over-year. That is hardly the explosive growth generated by AI, but it provides another source of revenue and cash flow.

More importantly, Broadcom has its infrastructure software business. Infrastructure software revenue reached $8. 8 billion, up 29% year-over-year, while annual recurring revenue grew 15%.

Why It's Time to Load Up on Broadcom Stock An AI slowdown would undoubtedly pose a risk to Broadcom. The company's exceptional recent growth has been closely tied to surging AI infrastructure spending, and any pullback in hyperscaler or frontier-model investment could temper semiconductor demand. However, Broadcom has established long-term custom accelerator relationships with major AI developers, while its AI networking business continues to expand rapidly.

Broadcom also benefits from a substantial infrastructure software operation and a diversified, growing, non-AI semiconductor business. Moreover, management's projections for AI revenue growth through 2028 suggest that it expects demand to remain strong well beyond the current investment boom. Broadcom stock may remain volatile in the near term, but AVGO is now 30% below its recent high, creating an attractive entry point for long-term investors.

A slowdown in AI development does not necessarily signal the end of Broadcom's growth story. Instead, the current pullback could offer investors an opportunity to accumulate shares before the company's next phase of growth becomes more fully reflected in its valuation. Wall Street still has a "Strong Buy" consensus rating on Broadcom stock.

www. barchart. com On the date of publication, Amit Singh did not have (either directly or indirectly) positions in any of the securities mentioned in this article.

All information and data in this article is solely for informational purposes. This article was originally published on Barchart.