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Featured Story from MarketBeat

Broadcom's $30 Billion Apple Deal: This Chip Giant Is About More than Just AI

Written by Leo Miller. Originally Published: 7/10/2026.

Key Points

Broadcom extended its chip supply agreement with Apple through 2031, a deal Apple expects to exceed $30 billion in value.
Non-AI semiconductors and infrastructure software together made up just over half of Broadcom's revenue last quarter, showing diversification beyond AI chips.
Broadcom forecasts accelerating growth across AI semiconductors, non-AI semiconductors, and infrastructure software next quarter, even as its shares trade about 20% below their highs.
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Semiconductor giant Broadcom (NASDAQ: AVGO) has made a name for itself as one of the leading players in AI chips. The industry behemoth, NVIDIA (NASDAQ: NVDA), is still far and away the world’s largest AI chip company. However, Broadcom’s AI sales tower over those of other top names like Advanced Micro Devices (NASDAQ: AMD) and Intel (NASDAQ: INTC).

But Broadcom is far more than an AI chip company. Its latest deal with tech giant Apple (NASDAQ: AAPL), which has an expected value of more than $30 billion, makes that clear.

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With this long-term agreement, Broadcom is locking in sales from one of its most important non-AI chip customers for years to come. Apple is also the world’s leading consumer device company, once again demonstrating Broadcom's ability to attract the biggest names in technology.

The deal is a reminder that investors should not view Broadcom solely through the AI lens. Although the company is heavily tied to the AI trade, investors would be remiss not to recognize its strength outside AI when evaluating the company and its stock.

Apple: Broadcom’s Non-AI Chip Engine

To understand the significance of this deal, it helps to look at the breakdown of Broadcom’s revenue streams. Broadcom reports three key revenue lines: AI semiconductors, Infrastructure Software, and Non-AI Semiconductors. Its relationship with Apple falls squarely within the non-AI semiconductor segment, where Apple serves as an anchor customer. Apple has been a long-standing Broadcom customer, first using Broadcom chips back in 2009 for the iPhone 3GS.

While Non-AI Semiconductors is Broadcom’s smallest segment, it remains an important revenue stream for the company. At $4.2 billion last quarter, it represented approximately 19% of total sales of $22.19 billion.

Past statements from Broadcom suggest that the company’s Q4 2024 revenue from Apple was near $2.2 billion. Based on that, it is plausible that Apple now accounts for roughly half of Broadcom’s non-AI chip revenue and about 10% of its total revenue.

In that context, the new agreement is highly significant. By extending the agreement through 2031, Broadcom secures a vital non-AI customer and a large, long-term revenue stream.

Notably, this marks the second time in recent years that the companies have extended their partnership, underscoring Broadcom’s ability to retain key customers. In 2023, the companies announced a deal under which Broadcom would produce 5G radio-frequency components for Apple.

Now, Broadcom and Apple are renewing their radio-frequency chip partnership. Apple notes, “Broadcom will produce advanced radio-frequency components—including FBAR filters—and advanced wireless connectivity technologies at the Fort Collins facility.”

Apple expects the agreement to exceed $30 billion, with Broadcom producing more than 15 billion U.S.-made chips. To support the partnership, Broadcom will invest $1.5 billion to expand and upgrade its Fort Collins facility. While that is a cost for Broadcom, the payoff is well worth it and far larger in scale.

Beyond AI Chips: Non-AI Semiconductors and Software Are Huge Revenue Drivers

While Broadcom’s relationship with Apple is important, it is also worth noting the significance of its other large business outside AI chips: Infrastructure Software. The company’s infrastructure software business is primarily tied to VMware. VMware provides hypervisor software, which allows companies to use computing resources more efficiently.

In its latest quarter, Broadcom’s Infrastructure Software business generated $7.2 billion in revenue, or 32% of total sales. This reinforces the point that investors should not view Broadcom only as an AI chip company. Together, Non-AI Semiconductor sales and Infrastructure Software sales totaled $11.4 billion. In other words, just over half of Broadcom’s total sales came from sources other than AI chips, providing a meaningful level of diversification away from AI revenue.

Additionally, Broadcom expects both non-AI chip revenue and infrastructure software growth to accelerate significantly next quarter. It forecasts non-AI chip growth of 12% year over year (YOY), compared with 6% YOY last quarter. Non-AI chip bookings also came in at $6 billion last quarter. Broadcom says the figure being significantly higher than sales is a “clear indication we're on a path towards a full cyclical recovery." Meanwhile, it sees infrastructure software sales rising 31% YOY, compared with 9% YOY last quarter.

Still, with AI semiconductor growth expected to rise by more than 200% YOY, up from 143% YOY last quarter, the AI semiconductor segment is clearly Broadcom's main growth driver.

As AI contributes the vast majority of growth, it will continue to have an outsized impact on Broadcom’s share price.

Broadcom Keeps Chugging Away Amid Share Weakness

Overall, Broadcom’s Apple deal solidifies one of its largest relationships with a single customer. Meanwhile, the company expects all three parts of its business to experience accelerating growth next quarter.

With that, the world’s second-largest semiconductor company continues to fire on all cylinders, despite shares being down about 20% from their highs.

Tuesday's Bonus Story

AeroVironment Flies Under Wall Street’s Radar Toward a $4 Billion Target

By Jeffrey Neal Johnson. Posted: 7/10/2026.

Key Points

AeroVironment’s fiscal 2030 targets triggered analyst concern about execution risk, even as management pointed to strong long-term demand.
AeroVironment’s fiscal fourth-quarter results showed record revenue, strong adjusted EBITDA and a larger funded backlog.
The company’s counter-drone contract wins support the bullish case, but investors still need to weigh valuation, integration risk and the timing of government spending.
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Wall Street analysts reacted sharply recently when AeroVironment's (NASDAQ: AVAV) management unveiled an aggressive revenue target of $3.5 billion to $4 billion for fiscal 2030. The immediate response was a wave of synchronized downgrades, with analysts citing severe execution risk and flat macroeconomic defense budgets.

The resulting sell-off contributed to a 38% year-to-date pullback, pushing AeroVironment's stock price near its 52-week low. When institutional players focus too narrowly on near-term organic guidance, they often miss the broader structural shift unfolding in plain sight.

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The prevailing narrative suggests AeroVironment needs a miraculous, back-weighted acceleration to hit its 2030 goals. Analysts looked at the projected 10% organic growth for fiscal 2027 and concluded that the math for the end of the decade was too difficult to achieve. That skepticism triggered a sharp repricing, creating a steep discount for investors willing to look past headline volatility.

Clearing the Air on the 2030 Roadmap

A closer examination of recent financial metrics, strategic acquisitions, and near-term contract monetization reveals a very different reality for AeroVironment. The underlying growth trajectory is not only highly visible but also effectively derisked by recent operational execution. The data points to a stark disconnect between price action and business fundamentals.

Modern kinetic conflicts have fundamentally altered global military doctrine. The Pentagon is actively redirecting procurement budgets away from slow, expensive legacy platforms like fighter jets and toward attritable unmanned systems and Counter-UAS technology. AeroVironment is positioned as a premier pure-play asset in this space, making the macroeconomic argument about flat defense budgets largely irrelevant to its specific product suite.

Profitability Takes Flight in Fiscal Q4

Understanding the valuation disconnect requires looking at the raw data from the fiscal fourth quarter of 2026. AeroVironment delivered a blowout earnings report, generating a record $642 million in quarterly revenue. That represents 31% year-over-year organic growth. Most importantly, AeroVironment reported $140 million in Adjusted EBITDA, translating to a 22% margin.

This margin metric directly neutralizes the primary bearish argument. Major firms downgraded the stock because they doubted management's ability to reach its stated 2030 target of 18% to 20% Adjusted EBITDA margins. The earnings data show AeroVironment is already operating comfortably above that threshold.

In the defense technology sector, operating leverage is a critical driver of shareholder value. As revenue scales through the mass production of unmanned systems, fixed engineering and administrative costs are spread more thinly, sending more cash flow directly to the bottom line.

Analysts are actively pricing in severe margin compression to justify their lowered price targets, yet the most recent filings strongly refute that assumption. Management is not chasing a futuristic profitability goal; it is already executing above it today.

Securing the Shield With a $500M Army Contract

AeroVironment positioned itself well for the Pentagon's strategic pivot through the integration of BlueHalo. This acquisition nearly doubled AeroVironment's operational footprint and established a dominant position in the highly lucrative Counter-UAS market.

Proof of that strategic dominance arrived quickly via a $500 million sole-source contract for the U.S. Army's JIATF-401 Domestic Shield Program. A sole-source award is a significant vote of confidence. It means the Department of Defense bypassed the standard competitive bidding process entirely, viewing AeroVironment's technology as a unique, irreplaceable necessity.

Skeptics often argue that large government contracts take years to monetize, creating a lag between headline numbers and recognized revenue. However, AeroVironment immediately booked an $80.5 million task order against this vehicle for its Titan system. This swift conversion from theoretical contract value to tangible cash flow highlights a highly efficient procurement cycle.

This contract adds to AeroVironment's multi-year visibility. The defense contractor currently holds a $1.2 billion funded backlog alongside a sweeping $1.5 billion unfunded backlog. Funded backlog represents dollars already appropriated by Congress and assigned to specific deliverables, essentially helping to secure future revenue. An unfunded backlog indicates indefinite-delivery vehicles in which the maximum value is set, but orders are placed incrementally over time. Together, these expansive $2.7 billion pipelines provide a thick layer of insulation against broader macroeconomic headwinds.

Catching Bears in the Crosshairs

The recent 38% price drop is heavily tied to market mechanics rather than fundamental deterioration. Short interest currently hovers around 12.6% of the float, translating to roughly 4.8 million shares sold short. The days-to-cover ratio is 4.6, indicating it would take nearly five days of average trading volume for short sellers to fully exit their positions.

This data frames the post-Investor Day sell-off as an aggressive short-selling distortion. Short sellers bet heavily on the execution risk narrative. When a business navigating negative trailing net margins trades at a forward price-to-earnings multiple of 44, it naturally attracts bearish speculators looking to capitalize on perceived overvaluation.

The bears are anchoring their thesis to trailing profitability metrics rather than forward cash flow and aggressive backlog conversion. As those newly minted task orders convert to recognized revenue at 22% margins, the fundamental floor beneath the stock rises.

A manufactured dip driven by weak hands and overzealous short sellers creates a highly volatile, asymmetric environment. If upcoming earnings reports continue to validate the $4 billion revenue roadmap, short sellers will be forced to buy back shares at higher prices to cover their positions, potentially triggering an upside re-rating for AeroVironment.

Preparing for a Permanent Shift in Procurement

The market is currently mispricing a premier growth asset in the defense technology space. While the 2030 targets sound highly ambitious on paper, the operational groundwork is firmly established and actively generating cash. The combination of record EBITDA margins, sole-source contract dominance, and a multi-billion dollar backlog paints a picture of a business quietly taking market share while Wall Street looks the other way.

Investors seeking exposure to the permanent shift in global military doctrine might view this volatility as a rare structural opportunity. The Pentagon's transition toward swarm drones and loitering munitions is not a temporary trend, but a permanent evolution of defense spending.

Cautious market participants may prefer to watch the next quarterly earnings report to confirm ongoing backlog monetization before taking a position. Those with a higher risk tolerance might consider the current valuation disconnect a compelling moment to evaluate AeroVironment before the broader market digests the reality of its long-term trajectory.

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Further Reading: I paid $5,000 to hear Elon say this