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Broadcom Inc. (AVGO) Intrinsic Value

DCF-based fair value calculation with Bear, Base, and Bull scenarios

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Broadcom Inc. (AVGO)

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Intrinsic Value (DCF)

Current$354.61
→
Intrinsic$142.87
-60%
$84.80$142.87$283.19
Current price reflects execution expectations above 18% growth — not unreasonable for quality businesses.
Range: Bear $85 → Bull $283. Current price implies expectations above the base case, closer to bull expectations.
Current price reflects assumptions at the upper end of our valuation range (bull case: $283).
Discount ↓Growth →14%16%18%20%
6%$210$229$250$272
8%$120$131$143$156
10%$81$89$97$106
12%$59$65$71$78

Bull Case

  • Bull case ($283) with 22% growth, 7% discount rate

Bear Case

  • Bear case ($85) implies 76% downside at 14% growth, 10% discount
  • Trading 60% above base case — execution must exceed assumptions to justify
  • Price exceeds bull case ($283) — requires exceptional execution
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5-Year Free Cash Flow Projection

Year 1$22.90B
Year 2$27.01B
Year 3$31.85B
Year 4$37.57B
Year 5$44.31B
Terminal$903.73B

📐 Model Inputs

Growth Rate17.9%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate8.1%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Free Cash Flow$19.41BTTM actual
Bear g×0.8, r+2%
Base Historical CAGR
Bull g×1.2, r−1.5%
ℹ️

DCF estimates based on historical growth rates extrapolated forward. See FAQ below for full methodology.

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Frequently Asked Questions

Is AVGO stock undervalued or overvalued?
🔴 OVERVALUED

AVGO trades at $354.61 vs. our DCF-derived intrinsic value of $109.64, implying -68% downside. Using a 8.1% WACC and 17.9% FCF growth assumption, the current price requires growth rates above our estimates to be justified. Even our bull case ($181.29) suggests limited upside.

What is AVGO's intrinsic value?

Using a 5-year DCF model: Base FCF of $19.41B, projected at 17.9% 5Y CAGR (best of revenue, EPS, or FCF growth), discounted at 8.1% WACC, with 3.0% terminal growth. Terminal value calculated via Gordon Growth Model: TV = FCF₅ × (1+g) / (WACC−g). After deducting $58.22B net debt and dividing by 4.78B shares: Bear $66.04 | Base $109.64 | Bull $181.29. Current price $354.61 implies -68% to base case.

How is AVGO's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 17.9% growth derived from 5-year historical CAGR (best of revenue, EPS, or FCF growth, with 8% floor and 25% cap).

② Calculate terminal value at year 5 using perpetuity growth model with g=3.0%.

③ Discount all cash flows to PV using WACC=8.1%.

④ Sum PV of explicit period + PV of terminal value = Enterprise Value ($582.08B).

⑤ Subtract net debt, divide by shares outstanding.

Sensitivity analysis available above—adjust WACC ±2% or growth ±3% to stress-test the valuation. Implied EV/FCF multiple: 30.0x.