Broadcom Inc (NASDAQ: AVGO) continues to struggle as China vowed “resolute and forceful” measures after the US raised its tariffs further on imports from Asia’s largest economy to more than 100%.
Escalating Sino-US trade tensions are meaningful for AVGO as it currently generates some 20% of its overall revenue from Beijing.
Still, there’s reason to load up on Broadcom stock that’s now down more than 35% versus its year-to-date high.
Broadcom stock is trading at an attractive valuation
While there evidently are headwinds facing AVGO, the massive sell-off in the tech stock since the start of this year has turned it quite attractive in terms of valuation.
Broadcom shares are now going for a forward price-to-sales multiple of less than 15.
That’s down significantly from Nvidia’s more than 18.
That’s part of the reason why JPM analysts called Broadcom stock a prime candidate for a “relief rally” in their recent note to clients.
The investment firm recommends buying AVGO shares on the pullback and sees upside in them to $250 that indicates potential for a more than 60% gain from current levels.
A dividend yield of 1.51% makes Broadcom Inc all the more attractive to own ahead of an expected tariffs driven recession in the back half of 2025.
AVGO’s new buyback could help its share price recover
Earlier this week, Hock Tan, the chief executive of Broadcom Inc, announced a $10 billion share repurchase programme that he said will be fully executed by the end of this year.
Tan’s announcement is super positive for AVGO investors as it essentially confirms the company’s management remains confident despite an increasingly challenging macroeconomic backdrop.
Despite headwinds, Broadcom CEO continues to see strong momentum in the demand for its custom chips that he believes could push the company’s AI revenue up by 50% in 2025.
On the earnings call last month, Tan signalled new customers for the firm’s custom AI accelerators that positions AVGO to go up directly against the artificial intelligence darling, Nvidia.
Why Cramer isn’t buying AVGO shares
Famed investor Jim Cramer also welcomed Broadcom’s stock buyback announcement in his latest update to members of his Investing Club this week, adding “this is a great situation.”
Cramer expects the repurchase programme to put a floor under AVGO share price as it will serve as a consistent buyer even during challenging times.
The multinational wouldn’t have announced a sizable buyback like this if it was even a little bit concerned about cash generation through the remainder of 2025, he added.
That said, the former hedge fund manager confirmed that he won’t be loading up on Broadcom stock at current levels as he already has a big enough position (650 shares/3.55 weighting) in the AI chipmaker.
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