Broadcom (AVGO) made headlines earlier in the week due to insider selling that has raised investor concerns. The company’s CEO, Hock Tan, began the new year by offloading stock worth $24.3 million, selling 70,000 shares at $347.3. He now holds 908,474 shares in total. CFO Kirsten Spears and Chief Legal Officer Mark Brazeal also sold stock worth $10 million.
While insider selling like this always raises concerns, it isn’t something out of the ordinary. In fact, during the same week that these company officials were selling, analysts were encouraging people to buy. For example, Mizuho came up with a target price upgrade, while Cathie Wood of ARK Invest added more than $10 million worth of shares. She took advantage of a dip in AI stocks last week, which shows how investors are still keeping a close eye on the stock and waiting for the right opportunity to buy.
Broadcom sells a range of semiconductor solutions, software, and security solutions to customers across the globe. It is headquartered in Palo Alto, California, but has a presence in more than 100 locations in the world, spread mainly across the U.S., Europe, and Asia.
The stock’s 50% one-year returns are impressive, though they are just about in line with the 51% returns of the iShares Semiconductor ETF (SOXX) during the same period. As one of the leaders in custom chipmaking, the firm enjoys an edge, and that edge is reflected in its returns.
It is also interesting to look at the company’s valuations in the context of CEO Hock Tan’s sale. AVGO is trading at a forward P/E of 45.93x, 3.25% lower than its own 5-year historic average. So the question of peak valuation can be set aside, as he has had more attractive valuations to sell the stock at in the past. It is true that the dividend yield of 0.68% is not only well below the IT sector’s average of 1.4%, but it is also significantly below the stock’s own 5-year average of 2.05%. But then, CEOs seldom buy and sell a stock for its dividend yield.
Compared to peers, AVGO’s forward P/E of 45.93x is well above that of Nvidia’s (NVDA) 40.45x. However, this is nothing new and again does not point to any outrageous overvaluation that could force an insider to go for the exit. One can therefore safely assume that the business is going strong, and the insider selling has more to do with the individuals’ personal finances for 2026 rather than issues with the underlying business.
