Jim Cramer made a straightforward call on Broadcom (NASDAQ:AVGO | AVGO Price Prediction) after its latest earnings: the stock is undervalued, full stop. And when you look at what the business actually reported, it is hard to argue with him.
“This is an undervalued stock versus where people thought it was going to be,” Cramer said, pointing to a company whose fundamentals are clearly accelerating even as the stock sits well below its highs.
The Numbers Back Him Up
Broadcom just posted Q1 FY2026 revenue of $19.31 billion, up 29.5% year-over-year, beating estimates. The real story is AI: AI semiconductor revenue hit $8.4 billion, more than doubling year-over-year at 106% growth. That number exceeded even Broadcom’s own forecast.
CEO Hock Tan put it plainly on the earnings call:
“Our AI revenue growth is accelerating, and we expect AI semiconductor revenue to be $10.7 billion in Q2.”
Cramer highlighted the scale of what Broadcom is actually shipping: ten gigawatts going to customers including Meta, Anthropic, and OpenAI. These are not speculative future clients. They are live, paying hyperscalers with growing appetites for custom AI accelerators.
The Analyst Reaction Was Telling
One analyst raised his Broadcom 2027 estimates by 24% following the results, a revision Cramer compared to the kind of upward surprise seen after Nvidia’s blowout quarters. Morningstar went further, raising its fair value estimate to $500 and noting that shares currently trade closer to its bear-case valuation despite AI chip sales exceeding expectations. The consensus analyst target sits at $453, implying significant upside from today’s price of $331.98.
The Buyback Is Management Voting With Its Wallet
Broadcom announced a new $10 billion share repurchase program, but Cramer’s more pointed observation was this: the company bought back over $7 billion in shares in the most recent quarter alone. When management repurchases that aggressively, they are signaling they think the stock is cheap. That is the buyback as a valuation argument, not just a capital return story.
The Bear Case and the Real Wildcard
The central bear concern has been peak spending: are hyperscalers at maximum AI infrastructure investment? Cramer believes Broadcom addressed those fears directly by providing visibility into future demand on the call. Tan also pushed back on margin dilution concerns.
The stock is down about 13.5% from its December 2025 highs despite a business that is clearly inflecting upward. The forward P/E sits at just 31x on a company guiding for $22 billion in Q2 revenue. The one genuine wildcard Cramer flagged is geopolitical: if oil prices spike due to the ongoing conflict, broader market pressure could weigh on even the strongest names regardless of fundamentals.
The business is accelerating, management is buying back stock at scale, analysts are raising estimates aggressively, and the stock is sitting well below where it was three months ago. Whether you agree with Cramer’s “undervalued” label depends on your conviction in sustained AI infrastructure spending, but the evidence he is pointing to is real.
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