NASDAQ:AVGO Broadcom Inc.

ISIN: US11135F1012
TechnologySemiconductorsInfrastructure SoftwareAI-capex cohortDo Not Buy
NASDAQ · San Jose, CA · Hock E. Tan (CEO) · mega-cap Analysis Status: On-Going
$388.57
+0.14%
31 Jul 2026 · Signal v6
Changes Since Last Report (vs. 2026-07-16, $386.09)

Signal UNCHANGED — 🚫 DO NOT BUY across all three horizons. Price near-flat (+0.6% ($386.09 → $388.57)), but the name is more expensive on the anchor, not less: the 10-Y rose 4.48% → 4.67%, lifting the discount rate to 9.2% and trimming the warranted multiple 27x → ~26x, so clean 64.8x is now 2.46x warranted (was 2.36x). The 'S&P 500 concentration / AI earnings-quality unwind' tail was re-confirmed ARMED in the 30 Jul macro (top-10 ≈ 41% of the index; RSP flat while XLK ripped +5.5% on 29–30 Jul — breadth narrowing), so DNB Trigger 2(b) still fires. Economic Alignment: medium-term pressure flips Tailwind → Headwind (XLK medium Underperform in the 30 Jul macro); long stays Tailwind (XLK Outperform). Quality flat 86, driver flat 78. Timing nudged 44 → 47 (MTF confluence flipped bearish → bullish; price reclaimed the 200-DMA). Nothing in the business deteriorated — this remains a price-and-risk call.

DISCLAIMER: This is a quantitative framework for educational purposes only. It is not financial advice. Always do your own research and consult a licensed financial advisor before making investment decisions.

Broadcom Inc.

Broadcom is a global technology company built from two engines. Roughly two-thirds of it is semiconductors — most importantly the custom AI accelerators (XPUs/ASICs) it co-designs for hyperscale cloud operators and the Tomahawk/Jericho networking silicon that wires AI data-centre clusters together, alongside wireless, broadband and storage chips. The other third is infrastructure software, anchored by VMware (data-centre virtualisation) plus mainframe and cybersecurity franchises. Its edge is scale, deep customer integration and relentless cost discipline under CEO Hock Tan: it buys critical-infrastructure franchises, raises their margins and turns them into durable, high-cash-flow annuities. For a reader: think of Broadcom as one of the few 'picks-and-shovels' giants selling into both the AI hardware build-out and the enterprise software stack at once.

🚫 DO NOT BUY. Absolutely-expensive multiple (clean 64.8x = 2.46x warranted, above the 28x semis guardrail) paired with a live, currently-ARMED systemic de-rating catalyst (the macro AI-concentration / earnings-quality tail). Downside dominates. This is a risk call, not a business-quality call — Broadcom remains a high-quality franchise.
HorizonSignalComposite ScoreConfidenceKey Driver
Short-term (1–3 mo)DO NOT BUY4665%Expensive + armed AI-concentration tail (Trigger 2b)
Medium-term (6–12 mo)DO NOT BUY5465%Valuation-Ceiling gate + live de-rating catalyst
Long-term (3–5 yr)DO NOT BUY6265%Great business, wrong price — 2.46x warranted
Next update: 2026-08-14 — default +14d (Q3 FY26 earnings 3 Sep is >14d out; Semiconductors = Medium macro-sensitivity so the FOMC is not a scheduling trigger). The armed AI-concentration tail is a standing DNB condition, re-tested each refresh.
Table of Contents
1Five-Pillar Scorecard2Hard Gates & Do-Not-Buy Status3Pillar Detail: Business Quality4Pillar Detail: Valuation Attractiveness5Pillar Detail: Underlying Drivers6Pillar Detail: Economic Alignment7Pillar Detail: Entry/Exit Timing8Economic Event Risk9Multi-Timeframe Technical Analysis10Price Chart (6-Month Daily)11Scenario Summary12Entry / Exit Rules13Position Sizing Context14Calibration Snapshot15Data Sources & Methodology
1

Five-Pillar Scorecard

Five independent scores — each 0–100 with its own confidence. The three fundamental pillars (Quality / Valuation / Timing) set the base BUY/HOLD/SELL via the Decision Matrix; the two context pillars (Underlying Drivers, Economic Alignment) then amplify a BUY to STRONG BUY or a SELL to STRONG SELL when both corroborate.

Business Quality

86
excellent
conf 80%

Valuation Attractiveness

25
expensive
conf 85%

Entry/Exit Timing

47
neutral
conf 65%

Underlying Drivers

78
Strong Tailwind
conf 65%

Economic Alignment

60
Contrarian
conf 66%
2

Hard Gates & Do-Not-Buy Status

Binary safety checks — any TRIGGERED gate is a hard cap regardless of the scores above; CAUTION gates are sizing notes.
Financial Distress
Interest cover 11.0x, current ratio 2.24, FCF ~$27B — no distress.
Accounting / Dilution
Clean earnings (nonop 0%); no dilution or restatement flags.
Gate 3 — Valuation Ceiling
Clean 64.8x = 2.46x its ~26x warranted multiple AND above the 28x semis guardrail line. Either arm caps High-Quality + Expensive at HOLD and blocks any STRONG-BUY amplification.
Regulatory / Binary Event
No pending binary regulatory event.
Do-Not-Buy — Trigger 2(b): Valuation Extreme (absolute arm). The name is deep in the Anchor's Expensive band (clean 64.8x = 2.46x warranted, above the 28x guardrail) AND a material, currently-ARMED systemic de-rating catalyst is live — the macro report's 'S&P 500 concentration / AI earnings-quality unwind' tail (status: armed, stamp 2026-07-30). Broadcom materially belongs to that cohort: its multiple and revenue acceleration are directly levered to the hyperscaler AI-capex / custom-silicon trade. Arm (b) has no 'exceptional-growth' exemption (that belongs to arm 2a, which is why the name was merely HOLD at $360 in early July). Earnings are CLEAN (nonop 0%), so the earnings-quality half of the tail does not apply — but the AI-capex-leverage half does, and one arm of the cohort test is sufficient. Result: 🚫 DO NOT BUY, all three horizons.
3

Pillar Detail: Business Quality

A deep dive into the Quality score: business economics, moat, ROIC and the industry benchmark.
Business Quality — Pillar Score
Excellent — high-margin AI-silicon + software hybrid, accelerating
86
conf 80%

Lifecycle: Growth (accelerating). Broadcom is a hybrid — roughly two-thirds semiconductors (AI custom-silicon/XPU for hyperscalers, AI networking, wireless, storage) and one-third infrastructure software (VMware, mainframe, security) — so it is scored on a blended lens: Semiconductor gross-margin + utilisation on the chip side, software recurring-revenue / Rule-of-40 economics on the VMware side. Q2 FY26 (quarter ended 3 May 2026) revenue was $22.19B, +47.9% YoY — a genuine acceleration driven by the AI franchise, not a mix trick. TTM revenue ~$75.5B, TTM operating income $32.9B, TTM net income $29.3B.

Sub-signalValueReadScore
Revenue trajectory+47.9% YoY (Q2 FY26)Accelerating on AI custom-silicon + full VMware run-rate92
Gross margin (TTM)67.0%Strong for a fabless/software hybrid; software mix lifts it88
Operating margin (TTM)43.7%Elite operating leverage; Hock-Tan cost discipline90
Net margin (TTM)38.8%High, and CLEAN (non-op is a drag, not a boost)86
FCF (TTM)~$27.2B, FCF/sh $6.90Cash conversion >90% of op cash flow85
Balance sheetNet debt ~$45B; interest cover 11.0x; current 2.24Levered from VMware but comfortably serviced; de-levering on plan70
ROE (TTM)33.4%Top-decile; ROIC ~88th percentile of large-cap semis88
Industry benchmark — Semis GM + Utilisation blended with Software Rule-of-40. Chip side: 67% gross margin at high utilisation on an AI demand pull = top-band. Software side: VMware is being converted to subscription with expanding margins (Rule-of-40 comfortably cleared once growth + FCF margin are summed). Blended benchmark score 88. Quality is not the issue with this name — the price is.
Pricing power
78
Network effects
55
Switching costs
75
Cost advantage
75
Intangibles / IP
82

Moat score = 73. Switching-cost and cost-advantage sub-scores are trimmed directly from the competitive read below — stable share against credible rivals, not runaway dominance.

Competitive Environment. Broadcom's walls are strong but actively contested — which is why the moat is 73, not 90.
RivalThreat typeShare trajectoryMoat-erosion vector
Nvidia (NVDA)Merchant GPU vs custom ASIC — the substitute at the platform levelStable — different buying motion; hyperscalers run BOTHIf merchant GPUs get cheap/abundant enough, the case for bespoke ASIC narrows at the margin
Marvell (MRVL)Direct custom-silicon / ASIC competitor for the same hyperscaler programsStable to slightly ceding at the top end — AVGO holds the marquee accountsThe only credible second source for a custom XPU program — caps AVGO pricing power
Arista (ANET) / Cisco (CSCO)AI-networking / switching — the systems layer above the siliconStable — AVGO is the merchant silicon INSIDE many of their boxes (Tomahawk/Jericho)Hyperscaler in-house switch ASICs are the longer-run nibble
Hyperscaler in-house teams (Google TPU, AWS Trainium, Meta MTIA)Vertical substitution — the customer becomes the designerStable — AVGO co-designs many of these, so it captures the work rather than losing itThe structural tail risk: a hyperscaler internalises the full stack and drops the merchant partner
Net effect on moat → Switching Costs trimmed to 75, Cost Advantage to 75 (credible second-sourcing caps both). competitive_threat_level: moderate; share trajectory: stable. No named rival is currently taking share, but this is not a monopoly — so the downside path (§11) must carry a competitive / de-rating leg.

ROIC & capital allocation: ROIC in the top decile of large-cap semis (~88th percentile), ROE 33.4%. Capital-allocation score 80 — disciplined M&A (VMware being de-levered and margin-expanded on plan), a growing dividend (payout ~40%), buybacks. Management skin-in-the-game 60 — Hock Tan's alignment is strong, but SBC and the sheer size of past deals warrant a neutral-plus, not a maximal, score.

4

Pillar Detail: Valuation Attractiveness

Sector-appropriate multiples, FCF yield, reverse-DCF implied growth, embedded optionality, and the analyst-consensus cross-check.
Valuation Attractiveness — Pillar Score
Expensive — 64.8x clean = 2.46x warranted, above the 28x guardrail
25
conf 85%

Warranted-multiple anchor — the decisive lens. A company is the present value of its future cash flows: growth (g) lifts the warranted multiple, the discount rate (r) — which rises with interest rates — lowers it.

InputValueNote
Risk-free (10-Y UST)4.67%From FRED DGS10, 29 Jul 2026 — up from 4.48% at the prior report
Equity risk premium4.50%Fixed global constant
Risk add-on+0.0%Business-Quality 86 ≥ 65 → no add-on
Discount rate r9.2%4.67 + 4.50 + 0.0
g_near (yrs 1–5)14%Consensus growth haircut 25%, held near the 15% secular-growth cap despite +48% prints
g_term (yr 6+)3%Long-run nominal GDP cap
Warranted P/E~26.3xTwo-stage DCF; below the 28x semis guardrail
Actual clean P/E64.8xPrice $388.57 / TTM diluted EPS $6.00
Ratio (actual ÷ warranted)2.46x≥ 1.40 → EXPENSIVE; deeper than the prior 2.36x
EXPENSIVE — both arms of the ceiling fire. (1) Clean 64.8x is 2.46x the ~26x warranted multiple (≥ 1.40x). (2) 64.8x is also above the 28x Semiconductors guardrail line outright — no growth story overrides that floor. Either arm alone caps the name at HOLD; both fire. The rise in the 10-Y (4.48% → 4.67%) trimmed the warranted multiple 27x → ~26x, so on a near-flat price the name is more expensive than a fortnight ago, not less. Robustness: even at the maximum g_near = 20% allowed for a proven grower, the 28x guardrail still caps warranted AND the actual 64.8x still exceeds that floor — Expensive is unassailable.

The forward-P/E "mitigant" is exactly the hype the anchor is built to discount. Street models EPS roughly tripling by FY27 (some provider estimates put FY27 revenue near $175B vs ~$75B TTM — not credible at face value), which is how you get a ~20x "forward P/E." The anchor haircuts that optimism by design; on clean trailing earnings the name is 2.46x warranted. Do not let a forward multiple built on tripled earnings launder a 64.8x trailing multiple into "cheap."

Earnings quality — CLEAN, and if anything the multiple is understated. Non-operating items are a net drag (interest expense -$745M in Q2 FY26; total other income/expense -$739M) — there are no mark-to-market gains on private-AI stakes inflating EPS. TTM net income $29.3B sits below TTM operating income $32.9B, so clean_pe = reported P/E (nonop 0%). The TTM effective tax rate of 3.8% (a Q4-FY25 one-off benefit) actually flatters trailing EPS; normalised to ~14% tax, the trailing P/E would be ~70x+. No downward normalisation is warranted — the multiple is clean and deep-expensive.

Cross-checkReading
Analyst consensus target$506.5 (median $520, high $582, low $400) — +30% to consensus; 51 Buy / 8 Hold / 0 Sell (86% bullish, 59 covering)
EV/EBITDA (TTM)45.0x — rich vs semi peers even adjusting for software mix
P/S (TTM)24.4x
FCF yield~1.5% — thin for the multiple

The relative lenses can only order the name within the Expensive band the anchor sets — they cannot lift it out. Valuation score 25.

5

Pillar Detail: Underlying Drivers

The dominant external force the stock is tethered to, scored 0–100. A context pillar: it does not change the base signal — it feeds amplification (tailwind ≥65 can lift BUY→STRONG BUY; headwind ≤35 can push SELL→STRONG SELL).
Primary Driver
AI custom-silicon (XPU/ASIC) + AI networking; VMware annuity secondary
78
Strong Tailwind (amplification moot under DNB)

Primary driver: AI custom-silicon (XPU/ASIC for hyperscalers) + AI networking, with the VMware infrastructure-software annuity as the secondary. This is one of the two or three cleanest large-cap expressions of the AI-capex build-out: Broadcom co-designs bespoke accelerators for multiple hyperscalers and supplies the Tomahawk/Jericho switching silicon that stitches AI clusters together.

HorizonScoreRead
Historical90AI revenue has compounded hard; custom-ASIC bookings ramped through FY25–FY26
Current76Demand intact, order book strong; but the trade is crowded and consensus already prices a supercycle
Forward72Multi-year hyperscaler capex visible, yet capex-digestion / in-house-silicon risk caps the forward read

Driver score 78 — Strong Tailwind. Amplification is moot here: the base signal is HOLD (High Quality + Expensive) and the final signal is DO NOT BUY (Trigger 2b), so a strong tailwind never reaches the base to lift it — a driver can intensify a BUY, never rescue a gated/DNB name. Thesis-invalidation floor: a sustained hyperscaler AI-capex cut or custom-silicon order push-out that breaks the AI-revenue acceleration narrative.

6

Pillar Detail: Economic Alignment

How the current economic climate sits relative to this stock, read from the latest Macro-Economic report. Classifies the macro pressure (Tailwind / Neutral / Headwind) — the second amplification input — and frames a long entry as Trend-Following or Contrarian with a 0–100 conviction.
Stance · Pressure
Contrarian · Neutral (medium Headwind)
60
conviction

Technology → XLK carries a split macro read in the 30 Jul MacroDriver report: short Neutral · medium Underperform · long Outperform. So the pressure on Broadcom is Neutral in the short run, a genuine Headwind medium-term (down from Tailwind at the prior report — the AI-concentration tail is armed and breadth is narrowing), and a Tailwind long-term (the secular AI build-out). Buying an Expensive AI-cohort mega-cap into a medium-term sector Underperform + an armed concentration tail is a Contrarian stance, hence conviction is a middling 60.

Source: sector-map · Macro report 2026-07-30

7

Pillar Detail: Entry/Exit Timing

The risk-reward framework, relative strength vs SPY and the sector ETF, the macro overlay, news-derived sentiment, and the catalyst cluster.
Entry/Exit Timing — Pillar Score
Neutral — above 200-DMA, below 50-DMA; longer-TF confluence bullish
47
conf 65%

The tape is constructive on the longer timeframes and choppy intraday — but timing is a secondary consideration when the name is gated Expensive and DNB. Price $388.57 sits above the 200-DMA ($365.78) but below the 50-DMA ($395.74); RSI(daily) 50.9 is neutral, daily MACD -2.34 (histogram just turned up +0.45).

Sub-signalValueRead
MTF confluenceBullish (longer-TF)Monthly + weekly + hourly uptrend; daily/15-min weakening — flipped from bearish at the prior report
Risk-reward48Reward to consensus is real, but entry above both the June low and the anchor's fair band is poor
Relative strengthIn lineRecovered off the June low (~$360); roughly in line with XLK (short Neutral)
Catalyst cluster68Q3 FY26 earnings 3 Sep 2026 is the next real catalyst (>14d out)
Dynamic macro weight0.15Semiconductors = Medium macro-sensitivity

Timing score 47 (up from 44). A better tape does not change the call: an Expensive name with an armed systemic de-rating catalyst is a DO NOT BUY regardless of momentum.

8

Economic Event Risk

High-impact macro releases in the next 14 days that could swing this stock, plus the last 7 days of surprises.

Upcoming events (next 30 days)

DateEventImpactForecastPreviousRelevant?Why
2026-08-12US CPI (Jul)HighIndirectRate path feeds the discount rate on a long-duration semi multiple
2026-09-03Broadcom Q3 FY26 earningsHighEPS ~$3.22 / rev ~$29B (est)Q2 $1.91 dilDirectAI-revenue trajectory + custom-ASIC bookings — the key catalyst; >14d out
2026-09-16FOMC decisionMediumIndirectSemis = Medium macro-sensitivity; rate path feeds the anchor

Recent surprises (last 7 days)

DateEventActualForecastSurpriseImpact
2026-07-2910-Y Treasury yield4.67%+19bp vs prior reportLifts r to 9.2% → warranted multiple 27x → ~26x → more Expensive
2026-07-30Macro AI-concentration tailarmedre-confirmedKeeps DNB Trigger 2(b) live; top-10 ≈ 41% of index, breadth narrowing

The only stock-specific catalyst of note is Q3 FY26 earnings on 3 Sep — beyond the 14-day window, so the next scheduled refresh is the default +14d (14 Aug). The macro backdrop (armed concentration tail, 10-Y at 4.67%) is what pins the signal.

9

Multi-Timeframe Technical Analysis

Trend, RSI and breakout status across monthly / weekly / daily / hourly / 15-minute, with a confluence verdict.
TimeframeTrendDirectionRSIMACDKey S/RBreakoutVol
MonthlyUptrend63.7+2.8 histR 414.6resistance_breakout0.8x
WeeklyUptrend52.7−4.4 histS 321 / R 414–495resistance_breakout0.79x
DailyWeakening50.9−2.34S 360 / R 414 · 50-DMA 395.7below 50-DMA1.13x
HourlyUptrend54.3+1.83R 399.9resistance_breakout
15-minWeakening50.0−0.06S 379.7support_breakdown
Confluence: Bullish (longer-TF) · mixed intraday · MTF Score 58

Longer timeframes are constructive (monthly/weekly/hourly uptrend, price back above the 200-DMA at 365.8) while the daily and 15-min are weakening under the 50-DMA at 395.7. Net: the tape has healed since the June low but sits in a $360–$414 range. Immaterial to the call — the name is gated Expensive and DNB regardless of the chart.

10

Price Chart (6-Month Daily)

A 6-month daily close line with SMA50 and key support/resistance — the visual companion to the MTF table.

Indicative 6-month daily close (synthesised from known anchors: 52-wk low $281.61, a $414 high, the June low ~$360, 50-DMA $395.7, 200-DMA $365.8, spot $388.57). For visual context only.

11

Scenario Summary

Bull / Base / Bear 12-month price paths with triggers and probability weights.

Bull $560 (25%)

The AI-capex supercycle sustains and broadens: custom-ASIC wins accelerate across multiple hyperscalers, AI networking share holds, VMware margins keep expanding. The market keeps paying a premium multiple as earnings compound into it. Price runs toward the Street high (~$582). ~+44%.

Base $455 (50%)

The franchise compounds but the multiple grinds lower as the 10-Y stays elevated and the sector digests capex. EPS growth (toward ~$19–20 on FY27 Street) offsets modest de-rating; price drifts up toward consensus-minus. ~+17%. Most probable.

Bear $215 (25%)

The COHORT MULTIPLE-DE-RATING leg (mandatory, and armed): the macro AI-concentration / earnings-quality tail fires — a hyperscaler capex guide-down or an AI private-markdown event — and the whole AI-capex cohort re-rates. AVGO's 64.8x compresses toward the low-20s on FY26 earnings; a Marvell/in-house-silicon share scare adds a company-specific leg. ~−45%. This is a live, not hypothetical, left tail — which is precisely why the signal is DO NOT BUY rather than HOLD.

Probability-weighted fair value ≈ $421 (0.25·560 + 0.50·455 + 0.25·215), which sits above today's $388.57. That is deliberate and not a contradiction of the DO-NOT-BUY call: DNB is a risk-override, not a modal-target call. Two things sit on top of the positive modal path — (1) the Valuation-Ceiling hard gate caps the name at HOLD on price alone, and (2) Trigger 2(b) overrides to DO NOT BUY because the −45% bear is an armed systemic catalyst (the 30 Jul macro's AI-concentration tail), not a hypothetical. When a fat, live left tail can erase two-plus years of upside in one re-rating, the risk-adjusted entry is poor even though the mean is positive. We do not chase a name that is obviously overpriced AND carrying a live puncture risk.

12

Entry / Exit Rules

Three independent entry paths (Fundamental · Technical · Catalyst) and three exit triggers (Stop-Loss · Thesis · Profit-Target). Any one entry path is a valid entry — the more that agree, the larger the position the conviction ladder suggests. Exits are graded by severity, not count.

How to read this — the Conviction Ladder

The three entry groups are alternative paths to a buy, not a checklist. A group counts only when all its sub-conditions hold. How many groups are satisfied sets the suggested size — it does not gate whether you may enter: 1 group = Half-Size (a valid starter/scale-in), 2 = Full-Size, 3 = Over-Size (highest conviction); 0 = Wait (no path open yet). A strong overall signal can still read Wait here when the stock is well above its entry zones — that flags "good business, no entry edge right now," not a contradiction. Exits are graded by severity of what is live, not by a count: a hard stop is an Exit on its own.
Entry conviction: Wait0 of 3 groups met — no entry path open

Fundamental — not MET

Price is far above any defensible fair value; the Valuation-Ceiling gate is triggered.
⛔ Price $388.57 ≤ warranted fair band (~$160–215 on the anchor; blended fair-value est ~$315)
⛔ Valuation band not Expensive
⛔ No armed systemic de-rating catalyst inherited

Technical — not MET

Longer-TF uptrend, but no entry edge — well above support and the anchor's fair band.
⛔ Daily reclaim of the 50-DMA ($395.7) on >1.5x volume
⛔ OR a tested bounce off $360 support with a higher low
✅ RSI(daily) 35–65 (50.9)

Catalyst — not MET

No event in the window; next catalyst is Q3 earnings (3 Sep, >14d out).
· Post-earnings gap >+5% with guidance raised AND a multiple that isn't gated

Forecast: No entry path opens while the name is Expensive AND the AI-concentration tail is armed. The realistic route back to even a HOLD is a de-rating: price into the ~$300s (toward the anchor's fair band) OR the macro report disarming the concentration tail (breadth broadening). Neither is imminent. Re-tested at the 14 Aug refresh.

Exit action: Holdno exit trigger is live — hold the position

Stop-Loss — not LIVE

⛔ (No position — hypothetical) two daily closes below $353 (below the 360 support cluster)

Thesis Invalidation — not LIVE

⛔ Sustained hyperscaler AI-capex cut / custom-silicon order push-out breaking the AI-revenue acceleration
⛔ OR credible share loss to Marvell / hyperscaler in-house silicon

Profit-Target — not LIVE

⛔ (No position) price into the base $455 with RSI > 70

Forecast: Not applicable — this is a DO-NOT-BUY, not a held position. The exit ladder is shown for completeness; no trigger is live.

Imagine you act at the current price of $388.57 · as of 31 Jul 2026

What if you bought now?

Buying now means paying 64.8x clean earnings (2.46x the ~26x a 9.2% discount rate and disciplined 14% growth warrant) into an armed AI-concentration de-rating tail. The modal path is up (~+17% to base), but the live −45% bear can erase two-plus years of that upside in one re-rating. Risking ~45% to make ~17–44% is the wrong side of the risk-reward — hence DO NOT BUY.

What if you sold now?

Not a held position here, so 'sell' is moot. If you hold Broadcom from far lower, the framework's message is different: the business is excellent and long-term aligned — this call is about not adding fresh money at 64.8x into a live tail, not a demand to dump a quality compounder.
13

Position Sizing Context

Illustrative portfolio math (not advice) translating conviction into an allocation given risk-per-share and volatility.

No fresh position is warranted at this price (DO NOT BUY), so no sizing is computed. Position sizing guidance would require your portfolio allocation and role — and in any case does not apply to a gated/DNB name.

14

Calibration Snapshot

Machine-readable snapshot of every score, level and signal, saved alongside the HTML so the next run can compute deltas.
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  "section": "Technology (Contrarian)",
  "country_table": "US",
  "date": "2026-07-31",
  "version": "v6",
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  "company": "Broadcom Inc.",
  "currency": "USD",
  "price_at_rating": 388.57,
  "lifecycle_stage": "growth",
  "sector": "Technology \u2014 Semiconductors + Infrastructure Software (hybrid)",
  "signal_short": "DO NOT BUY",
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  "primary_signal": "DO NOT BUY",
  "composite_short": 46,
  "composite_medium": 54,
  "composite_long": 62,
  "quality_score": 86,
  "quality_confidence": 80,
  "quality_detail": {
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    "industry_benchmark_value": 67,
    "industry_benchmark_score": 88,
    "moat_score": 73,
    "roic_percentile_vs_peers": 88,
    "capital_allocation": 80,
    "management_skin_in_game": 60,
    "gross_margin_ttm": 0.6696,
    "net_margin_ttm": 0.3885,
    "ebitda_margin_ttm": 0.5569,
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    "roe_ttm": 0.334,
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  "warranted_ratio": 2.46,
  "discount_rate_r": 9.2,
  "risk_free_10y": 4.67,
  "g_near": 14,
  "g_term": 3,
  "sector_guardrail_pe": 28,
  "clean_pe": 64.8,
  "clean_peg": 0.91,
  "actual_pe_ttm": 64.6,
  "valuation_detail": {
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    "ev_revenue_ttm": 25.5,
    "price_to_sales_ttm": 24.4,
    "price_to_book_ttm": 21.0,
    "fcf_yield": 1.5,
    "historical_valuation_decile": 7,
    "boundary_note": "EXPENSIVE on the warranted-multiple anchor \u2014 clean P/E 64.8x (TTM diluted EPS $6.00, price $388.57) vs a warranted ~26.3x (two-stage DCF: r 9.2% = 10-Y 4.67% + 4.5% ERP + 0.0% add-on for BQ>=65, g 14% near / 3% terminal), ratio 2.46x, AND above the 28x Semiconductors guardrail floor. Either condition fires EXPENSIVE (score < 40); both fire. The 10-Y rose 4.48%->4.67% since the prior report, trimming warranted 27x->26x, so on a near-flat price the name is MORE expensive (ratio 2.36x->2.46x). Even at max g_near=20% the guardrail still caps it. High Quality + Expensive -> HOLD base; STRONG-BUY amplification blocked."
  },
  "nonop_pct_of_net_income": 0,
  "earnings_quality_note": "CLEAN \u2014 non-operating items are a net DRAG (interest expense -$745M in Q2 FY26; totalOtherIncomeExpensesNet -$739M), no mark-to-market equity-stake gains. TTM net income $29.3B sits BELOW TTM operating income $32.9B, so reported EPS is not inflated; clean_pe = reported P/E. TTM effective tax 3.8% (Q4-FY25 one-off benefit) flatters trailing EPS; on a normalized ~14% tax the trailing P/E would be ~70x+ (richer). No downward normalization warranted.",
  "timing_score": 47,
  "timing_confidence": 65,
  "timing_detail": {
    "mtf_confluence_score": 58,
    "mtf_tool_confluence": "bullish",
    "trend_monthly": "uptrend",
    "trend_weekly": "uptrend",
    "trend_daily": "weakening",
    "trend_hourly": "uptrend",
    "trend_15min": "weakening (support_breakdown)",
    "risk_reward_score": 48,
    "relative_strength_vs_spy": "recovered off the June low (~$360) to ~$389; roughly in line 1m/3m",
    "relative_strength_vs_sector": "in line with XLK (short N)",
    "rsi_daily": 50.9,
    "macd_daily": -2.34,
    "sma50_daily": 395.74,
    "sma200_daily": 365.78,
    "atr_daily": 16.29,
    "catalyst_clustering_score": 68,
    "dynamic_macro_weight": 0.15,
    "macro_sensitivity": "Medium (Semiconductors)"
  },
  "driver_score": 78,
  "driver_label": "Strong Tailwind",
  "driver_confidence": 65,
  "driver_detail": {
    "primary_driver": "AI custom-silicon (XPU/ASIC for hyperscalers) + AI networking; secondary: VMware infrastructure-software annuity",
    "historical": 90,
    "current": 76,
    "forward": 72,
    "amplification_eligible": true,
    "amplification_applied": false,
    "amplification_blocked_reason": "Base signal is HOLD (High Quality + Expensive) and the final signal is DO NOT BUY (DNB Trigger 2b), so the driver tailwind is moot \u2014 amplification never reaches HOLD, and DNB overrides everything.",
    "thesis_invalidation_floor": "A sustained hyperscaler AI-capex cut / custom-silicon order push-out that breaks the AI-revenue acceleration narrative"
  },
  "economic_alignment_stance": "Contrarian",
  "economic_alignment_conviction": 60,
  "economic_alignment_pressure": "Neutral",
  "economic_alignment_pressure_short": "Neutral",
  "economic_alignment_pressure_medium": "Headwind",
  "economic_alignment_pressure_long": "Tailwind",
  "economic_alignment_source": "sector-map",
  "economic_alignment_confidence": 66,
  "macro_report_date": "2026-07-30",
  "macro_sector_signal": "XLK s:N m:U l:O",
  "competitive_share_trajectory": "stable",
  "competitive_threat_level": "moderate",
  "moat_score": 73,
  "overall_confidence": 65,
  "fair_value_est": 315.0,
  "stop_loss": 353.0,
  "support_levels": [
    365.78,
    360.46,
    321.42,
    289.96
  ],
  "resistance_levels": [
    395.74,
    414.64,
    442.36,
    495.0
  ],
  "target_price": 506.5,
  "analyst_consensus_target": 506.5,
  "analyst_target_high": 582,
  "analyst_target_low": 400,
  "analyst_target_median": 520,
  "analyst_target_upside_pct": 30.4,
  "analyst_grades_consensus": "Buy",
  "analyst_bullish_pct": 86.4,
  "analyst_coverage_count": 59,
  "recent_upgrades_30d": 0,
  "recent_downgrades_30d": 0,
  "fmp_rating": "B",
  "fmp_overall_score": 3,
  "hard_gate_state": "triggered",
  "gates_triggered": [
    "Gate 3 \u2014 Valuation Ceiling: clean 64.8x is 2.46x its ~26x warranted multiple AND above the 28x semis guardrail line. Either arm fires; both fire. Caps High Quality + Expensive at HOLD and blocks STRONG-BUY amplification."
  ],
  "gates_caution": [],
  "do_not_buy_triggers": [
    "Trigger 2(b) \u2014 Valuation Extreme (absolute arm): the name is DEEP in the Anchor's Expensive band (clean 64.8x = 2.46x warranted, above the 28x semis guardrail) AND a material, currently-ARMED systemic de-rating catalyst is live \u2014 the macro report's 'S&P 500 concentration / AI earnings-quality unwind' tail (status: armed, stamp 2026-07-30). AVGO materially belongs to that cohort: its multiple and revenue acceleration are directly levered to the hyperscaler AI-capex / custom-silicon trade. Arm (b) has NO 'exceptional proven growth' exemption. Earnings are CLEAN (nonop 0%), so the earnings-quality half of the tail does not apply, but the AI-capex-leverage half does \u2014 one arm of the cohort test is sufficient. Expensive + a live index-level de-rating catalyst = obviously overpriced AND risky -> DO NOT BUY, all three horizons."
  ],
  "dnb_trigger_2b_fired": true,
  "entry_groups_met": 0,
  "entry_conviction": "Wait",
  "exit_groups_live": 0,
  "exit_action": "Hold",
  "short_entry_confirmed": false,
  "short_hold_reason": "expensive",
  "short_cap_reason": "DNB Trigger 2b override (Expensive + armed AI-concentration tail)",
  "scenario_bull_target": 560,
  "scenario_base_target": 455,
  "scenario_bear_target": 215,
  "scenario_probs": {
    "bull": 25,
    "base": 50,
    "bear": 25
  },
  "next_update_date": "2026-08-14",
  "next_check_date": "2026-08-14",
  "next_update_basis": "default +14d (no dated catalyst before Q3 FY26 earnings 2026-09-03, which is >14d out; Semiconductors = Medium macro-sensitivity, so the 16 Sep FOMC is not a scheduling trigger). The armed AI-concentration tail is a standing DNB condition, re-tested each refresh.",
  "last_updated_human": "Jul 31, 2026",
  "prior_report": {
    "date": "2026-07-16",
    "price_at_rating": 386.09,
    "signal_short": "DO NOT BUY",
    "signal_medium": "DO NOT BUY",
    "signal_long": "DO NOT BUY",
    "quality_score": 86,
    "valuation_score": 26,
    "timing_score": 44,
    "driver_score": 78,
    "economic_alignment_pressure": "Neutral",
    "economic_alignment_conviction": 60,
    "warranted_ratio": 2.36,
    "hard_gate_state": "triggered",
    "do_not_buy_triggers": [
      "Trigger 2(b) \u2014 Valuation Extreme (Expensive + armed AI-concentration tail)"
    ]
  }
}

Every score, level and the full gate/DNB state is captured in the JSON above so the next run (14 Aug) can compute deltas. The load-bearing fields: val_band=expensive, warranted_ratio=2.46, hard_gate_state=triggered, dnb_trigger_2b_fired=true.

15

Data Sources & Methodology

Audit trail of every data source: fully available (✓), fallback (⚠), or failed (✗), plus provenance-based confidence haircuts.
Data Source Status
get_stock_snapshot / get_yahoo_quote price $388.57 (source of truth), +0.14%; market cap $1.84T reconciles to 4.88B diluted shares × price
get_income_statement (6q) Q2 FY26 rev $22.19B (+47.9% YoY); TTM diluted EPS $6.00; clean earnings confirmed
get_financial_ratios GM 67.0%, op margin 43.7%, ROE 33.4%, P/E(dil) 64.6x, EV/EBITDA 45.0x
get_multi_timeframe_analysis confluence Bullish (longer-TF); daily below 50-DMA, above 200-DMA
get_price_target_consensus / get_grades_consensus consensus $506.5 (median $520); 51 Buy / 8 Hold / 0 Sell
get_economic_series DGS10 10-Y 4.67% (29 Jul) → discount rate 9.2%
MacroDriver-state 2026-07-30 XLK s:N m:U l:O; AI-concentration tail status=armed (re-confirmed)
get_analyst_estimates (forward) FY27+ estimates look inflated (FY27 rev ~$175B vs ~$75B TTM); NOT used to source the multiple — clean TTM P/E used instead
Impact on scores: High confidence on price, quality and the anchor (all triple-corroborated). Forward estimates treated as suspect and deliberately not fed into the warranted multiple. No score is data-limited.
DISCLAIMER: This is a quantitative framework for educational purposes only. It is not financial advice. Always do your own research and consult a licensed financial advisor before making investment decisions.