avgo selloff buying opportunity custom chips

Everyone is debating whether AVGO's selloff is a buying opportunity. Here's the question they should actually be asking: is the custom silicon model structurally defensible?
The answer is yes — but with one critical caveat. Custom chips like Broadcom's XPUs are co-engineered directly with the hyperscaler. Google's TPU isn't just "powered by Broadcom" — it's designed jointly, with roadmaps locked in years ahead. That creates switching costs that make AMD or even Nvidia almost irrelevant as competitors in this specific segment. The Google supply agreement reportedly runs through 2031.
The risk isn't competition. It's insourcing. Amazon already moved Trainium 3 fully in-house. Microsoft is deepening Maia 2. If Meta or ByteDance decides to follow, Broadcom loses a customer that represents 15–20% of revenue with no replacement on the shelf.
The selloff isn't telling you the thesis is broken. It's telling you the market finally started pricing that tail risk.