Broadcom Inc (AVGO) stock has dropped 20% from its 52-week high, facing pressure due to concerns about profitability, particularly gross margins. The company’s AI-focused semiconductor products are gaining momentum, but the higher mix of AI-related revenue is impacting margins. Despite this, Broadcom expects to offset margin compression through scale and efficiency, with a focus on improving operating leverage. The company anticipates shipping more AI systems in the second half of the fiscal year, which may further impact gross margin percentages. However, Broadcom remains optimistic about sustaining solid growth with strong AI revenue and a robust order pipeline. Wall Street analysts continue to rate AVGO stock as a consensus “Strong Buy”.

Read more at Barchart: As Broadcom Shares Slide, Is AVGO Stock a Buy on the Dip?