China has officially banned cybersecurity software from a dozen U.S. and Israeli firms, including Broadcom-owned VMware, citing national security concerns. The announcement was made recently as part of Beijing's broader push to replace Western technology with domestic alternatives.
Following the news, Broadcom shares were inching down at the time of writing. Including today's decline, Broadcom stock is down more than 18% versus its 52-week high.
China's newly announced ban strikes right at the heart of Broadcom's enterprise software ambition. Losing access to its cybersecurity clients in Asia's largest economy not only erodes revenue but undermines Broadcom's ability to compete against global rivals, especially ones in the European Union.
Moreover, the ban raises geopolitical risk premiums, reminding investors that American tech firms remain vulnerable to retaliatory measures amid the ongoing U.S.-China rivalry. Collectively, this means near-term earnings pressure and heightened uncertainty around the giant's international expansion strategy, which may sustain downward pressure on Broadcom stock in the days ahead.
Despite the China setback, Broadcom shares remain worth owning mostly because the company's revenue base isn't concentrated on cybersecurity. It has a fairly diversified business spanning networking chips, enterprise software, and custom AI accelerators, supporting consistent double-digit earnings growth.
In 2025, the Nasdaq-listed firm signed a $10 billion agreement with Anthropic and another much bigger deal with OpenAI, reinforcing its status as a semiconductor powerhouse. Broadcom is attractive also because it's trading at a forward price-to-earnings multiple of about 42x at the time of writing, which isn't expensive for a fast-growing AI stock.
In fact, Mizuho analysts raised their price target on Broadcom this morning to $480, indicating potential upside of roughly 45% from here. Other Wall Street firms seem to agree with Mizuho on Broadcom shares especially since they currently pay a dividend yield of 0.77% as well.
According to Barchart, the consensus rating on Broadcom stock sits at "Strong Buy" with the mean target of about $457 signaling potential for another 35% rally from here.