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Apple vs. Broadcom: Is Either Stock a Buy After Their $30 Billion Chip Partnership?

Apple AAPL) and Broadcom AVGO) grabbed investors' attention this week after announcing a major expansion of their semiconductor partnership.The agreement, expected to exceed $30 billion over multiple years, will see Broadcom continuing to design and manufacture custom silicon and advanced wireless…

Apple AAPL) and Broadcom AVGO) grabbed investors' attention this week after announcing a major expansion of their semiconductor partnership.

The agreement, expected to exceed $30 billion over multiple years, will see Broadcom continuing to design and manufacture custom silicon and advanced wireless connectivity technologies for Apple products while significantly expanding its U.S. manufacturing footprint.

This partnership underscores Apple's commitment to strengthening its domestic supply chain while ensuring continued access to critical wireless components. Meanwhile, Broadcom further solidifies one of its largest customer relationships, extending its role as a key Apple supplier through 2031.

However, investors may be wondering if the extended partnership provides a big enough tailwind to still buy stock in either tech giant, especially Broadcom, with AVGO soaring over 130% in the last two years while Apple shares are up a respectable 37%.

Apple's Supply Chain Gets Even Stronger

Apple has spent years increasing control over its hardware ecosystem through custom silicon, and the latest Broadcom agreement complements that strategy rather than replacing it.

The agreement covers custom silicon, radio frequency components, FBAR filters, and advanced wireless connectivity technologies that are essential for future generations of iPhones, iPads, Macs, and other Apple devices.

Production is expected to exceed 15 billion U.S.-made chips, with Broadcom investing approximately $1.5 billion to expand its Fort Collins, Colorado, manufacturing facility.

This will also advance Apple's broader $600 billion U.S. investment initiative, which includes expanding domestic semiconductor manufacturing and reducing supply chain concentration overseas.

From a financial perspective, the agreement doesn't materially alter Apple's near-term earnings outlook. Still, it does reduce execution risk by locking in a trusted supplier for mission-critical connectivity chips, with Apple gaining traction on Nvidia NVDA) to become the world’s most valuable company.

Broadcom May Be the Bigger Immediate Winner

While Apple benefits strategically, Broadcom may receive the more immediate financial boost.

Apple has historically represented roughly 20% of Broadcom's annual revenue, making the iPhone maker one of its most important customers. Extending the partnership through 2031 removes uncertainty surrounding one of Broadcom's largest revenue streams while reinforcing demand for its custom connectivity and semiconductor solutions.

The agreement also comes as Broadcom continues to benefit from multiple secular growth trends.

Beyond Apple, Broadcom remains one of the semiconductor industry's largest beneficiaries of artificial intelligence infrastructure spending, supplying custom AI accelerators, networking chips, and data center connectivity solutions to hyperscale customers.

The Apple agreement further diversifies Broadcom's growth profile by adding another long-duration revenue catalyst outside traditional enterprise AI spending.

Tracking the Trend of EPS Revisions

Based on Zacks estimates, Apple’s annual earnings are expected to increase 17% this year and are projected to rise another 9% in fiscal 2027 to $9.57 per share. In the last 60 days, FY26 EPS estimates have remained unchanged, while FY27 EPS revisions are modestly higher.

Pivoting to Broadcom, FY26 EPS is expected to spike more than 70% to $11.73 compared to earnings of $6.82 per share last year. Furthermore, Broadcom’s annual earnings are projected to increase another 63% next year to $19.17 per share.

Broadcom’s FY26 EPS estimates are up 2% in the last 60 days from $11.45, with FY27 EPS revisions rising 7% from $17.81.

AAPL & AVGO Valuation Comparison (P/E)

At current levels, Apple and Broadcom stock trade at noticeable premiums to the benchmark S&P 500, with forward P/E multiples of roughly 36X and 39X, respectively.

While those valuations are elevated relative to the benchmark's forward earnings multiple of around 23X, neither stock appears excessively valued compared to many other high-growth technology companies.

Choosing Between Apple & Broadcom Stock

Apple generally trades at a premium valuation because of its unmatched ecosystem, recurring services revenue, exceptional profitability, and consistent capital returns. Investors typically view Apple as a lower-volatility mega-cap technology holding capable of delivering dependable long-term earnings growth.

Broadcom generally offers faster earnings growth thanks to its expanding AI infrastructure business, enterprise software operations, and custom semiconductor portfolio. Although Broadcom’s valuation has risen considerably during the AI boom, analysts continue to project robust double-digit EPS growth over the next several years.

For investors seeking greater AI exposure, Broadcom may offer a higher long-term growth ceiling and better capital appreciation (stock performance). Those prioritizing stability and cash generation that lead to reliable shareholder returns through dividends and stock buybacks may find Apple the more conservative choice.

Summary & Conclusion

Apple's expanded partnership with Broadcom reinforces the strategic importance of both companies in the evolving semiconductor landscape. Apple strengthens its domestic supply chain while securing critical wireless technologies for future devices, and Broadcom gains additional long-term revenue visibility through one of its most valuable customer relationships.

Despite the positive implications of the announcement, Apple and Broadcom stock both land a Zacks Rank #3 (Hold) at the moment. That said, a buy rating could be on the way for Broadcom if EPS revisions continue to rise, but this may be less plausible for Apple after today’s news that its iPhone sales are still slowing in China.

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