The Big Picture in 2030: Can Buffett's Berkshire Surpass Broadcom?

Question

This question seems a bit ridiculous, but the data speaks.

Broadcom's Risks

Broadcom (AVGO) has nearly tripled in value over the past 5 years, with a market capitalization of $1.6 trillion, ranking seventh globally. However, this surge is largely attributed to the AI chip boom—revenue has grown 761% over the last decade, and the Q4 guidance indicates a 24% YoY growth rate.

What is the problem? The current PE is as high as 88.5 times. It's important to note that it's still uncertain whether the hundreds of billions of dollars invested in AI infrastructure will ultimately translate into real profits. If this wave of AI investment cools down, Broadcom's stock price faces significant downside risk. Moreover, the company is heavily in debt: last quarter, it had only $1 billion in cash, but $6 billion in debt.

Berkshire's Moat

Berkshire's market value is $1.08 trillion, which seems lower than Broadcom's. But peeling back the layers reveals a significant difference:

Cash Firepower: $381 billion in cash + fixed income investments, close to $400 billion. This is real money that can be deployed at any time.
Portfolio: Holding quality stocks such as Apple, American Express, and Coca-Cola, with a market value of over 300 billion.
Operating profit: The operating profit in 2024 is $47 billion, which is twice the revenue of Broadcom.
Valuation is cheap: The PE is only 16 times, and the core business PE is less than 10 times after deducting investments and cash.

Berkshire's business is very diverse—insurance (earning over 20 billion annually), railroads, energy companies. This diversification means it does not rely on a single industry cycle.

Why is Berkshire worth more in 2030?

Simple logic: one is severely undervalued (PE16), has ample cash, and stable growth; the other is extremely overvalued (PE88.5), completely reliant on AI.

It is basically impossible for Broadcom to reduce its PE from 88 to a reasonable level in 10 years. On the other hand, Berkshire steadily accumulates assets every year. After ten years of compound interest, a market value reversal is almost a high-probability event.

Core issue: How long can the AI investment boom last? If a turning point occurs, Broadcom's downside potential could be significant.

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