Broadcom’s Resilience Amid Tariff Impacts and AI Growth Potential

Since President Donald Trump unveiled his new tariff agenda on April 2, the Stock market has faced significant volatility, particularly in technology stocks, which have been hit hard by fears and uncertainty.

Following the announcement of tariffs, the Nasdaq Composite dropped 7.5% as of April 18.

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A notable Nasdaq Stock that experienced a sharp decline post-announcement is semiconductor company Broadcom (NASDAQ: AVGO). Its shares sank as much as 20% before staging a rebound and are now down less than 1% at the time of this writing.

One key factor contributing to the stock’s recovery was the company’s recent announcement of a stock buyback. Management revealed that the board has authorized repurchases of up to $10 billion in shares through December 31.

Let’s look into the reasons behind this buyback decision and why investors might consider acquiring shares now.

Broadcom’s Strong Outlook Despite Tariff Challenges

I view these tariff policies as a part of U.S. negotiations for new trade agreements. While such actions can lead to turmoil in the market in the short term, the current uncertainty about upcoming trade discussions with various countries can distract investors.

Nonetheless, savvy investors tend to remain focused on broader trends rather than solely on fluctuating tariff discussions.

Instead, consider the key drivers in the artificial intelligence (AI) sector which bode well for Broadcom’s future.

• Cloud Hyperscalers: In recent earnings reports from major tech firms, cloud giants Microsoft, Amazon, and Alphabet indicated combined spending of nearly $260 billion on AI infrastructure in 2025. Broadcom’s existing partnerships with some of these companies position it well, capitalizing on increased spending for data center infrastructures that could benefit its networking and custom silicon services.
• Meta Platforms: Another member of the “Magnificent Seven,” Meta Platforms, plans to significantly increase its capital expenditures this year, projecting up to $65 billion—a 67% rise compared to last year. The company has been working with Broadcom to develop its own silicon, aiming to reduce dependency on Nvidia chipsets. This focus on AI development reinforces the positive outlook for Broadcom.

Image source: Getty Images.

Why This Is a Strategic Time to Invest in Broadcom

Despite the recent resurgence in Broadcom shares, the Stock is still down 26% year-to-date.

Data by YCharts.

The announcement of a stock buyback often indicates that management believes the shares are undervalued. The current sell-off has pushed Broadcom’s valuation to one of its lowest points in the past year, based on the forward price-to-earnings (P/E) multiple.

This valuation decline could signal that the Stock is oversold. However, I believe there’s a more nuanced reason to consider buying shares now.

Stock buybacks may take several quarters or longer to fulfill. Yet, Broadcom’s current $10 billion buyback program lasts until the end of the year. Regardless of whether the full amount is utilized, it is likely that management will repurchase shares in the coming months if prices remain low relative to historical levels.

When combined with Broadcom’s promising future due to ongoing investments in AI from major industry players, this Stock appears to be an attractive opportunity. Thus, despite short-term tariff-related volatility, it presents a chance to purchase leading AI growth shares at a discount.

Is Now the Right Time to Invest $1,000 in Broadcom?

Before making a purchase of Stock in Broadcom, consider this:

The Motley Fool Stock Advisor analyst team has identified what they consider the 10 best stocks to buy right now, and Broadcom is not included in that prominent list. These selected stocks are positioned to deliver significant returns over the next few years.

For instance, consider when Netflix was recommended on December 17, 2004… if you had invested $1,000 at that time, it would now be worth $524,747!* Or if Nvidia was added on April 15, 2005… a $1,000 investment would have grown to $622,041!*

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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development for Facebook and sister of Meta Platforms CEO Mark Zuckerberg, is also on The Motley Fool’s board. John Mackey, former CEO of Whole Foods Market (an Amazon subsidiary), is another board member. Adam Spatacco holds positions in Alphabet, Amazon, Meta Platforms, Microsoft, and Nvidia. The Motley Fool recommends Broadcom and holds positions in those companies, offering options recommendations as well.

The views and opinions expressed herein are solely those of the author and do not necessarily reflect those of Nasdaq, Inc.