Broadcom Hits Record High After CEO Hock Tan AI Pay Package

Key Points

• Broadcom gained nearly 10% on Sept. 10 as the market reacted to CEO Hock Tan's AI-driven incentive package.
• Markets took this as a clear bullish sign. However, Tan is also selling Broadcom shares.
• Ultimately, what conclusion should investors draw from these signals that appear to be in conflict with one another?

Less than a week after providing a highly encouraging financial update that sent shares soaring, chip giant Broadcom NASDAQ: AVGO made another huge move.

On Sept. 10, shares surged by approximately 9.8%, eclipsing the 9.4% up-move seen after Broadcom’s Sept. 4 earnings report.

This allowed Broadcom to close the day at nearly $370, its highest closing price of all time.

Below, we’ll break down the cause and decipher what it means for investors.

Broadcom’s CEO Has Over 600,000 New Reasons to Push for AI Success

On Sept. 9, Broadcom released a highly interesting Form 8-K filing that contributed to the stock’s big move on Sept.10. Companies use Form 8-K, a Current Report, to notify shareholders of significant events that may affect their investment decisions. This particular Current Report detailed the incentive package Broadcom extended to Chief Executive Officer (CEO) Hock Tan.

The package ties directly to what markets view as the most relevant driver of Broadcom’s stock price: artificial intelligence (AI) revenue. If Broadcom generates $90 billion in AI revenue in any rolling 12-month period from fiscal 2028 to fiscal 2030, the company will award him over 600,000 shares. 

Using Broadcom’s Sept. 16 closing price of around $361, the award would equal around $220 million. Furthermore, if Broadcom’s AI revenue exceeds $120 billion, Tan’s reward would triple.

This creates a powerful financial incentive for Tan to significantly increase Broadcom’s AI revenues over the next several years. For reference, Broadcom expects to generate just $20.2 billion of AI revenue in fiscal 2025. To reach $90 billion by fiscal 2028, Broadcom would need to grow its AI revenues at a staggering compound annual growth rate (CAGR) of 65%.

This would imply almost no deceleration from the 66% AI revenue growth Broadcom expects next quarter. Achieving this would likely be highly bullish for Broadcom shares. To reach $90 billion by fiscal 2030, the required CAGR falls to a still strong 35%.

Because investors are so fixated on Broadcom’s AI revenue growth, the package aligns tightly with the progress they want Broadcom to make. Additionally, Tan may not have agreed to this arrangement if he had not had confidence in Broadcom’s ability to increase its AI revenue vastly. 

This provides confidence in Broadcom’s future to markets, a key reason for the stock’s 9.8% rise.

Tan Sells Shares: A Curious Signal to Investors?

A counterpoint to this bullish argument is that Hock Tan recently sold a significant number of Broadcom shares. On Sept.10, Tan sold 148,154 shares, valued at just under $50 million. This sale was discretionary, adding weight to the idea that it is a potentially bearish signal.

However, multi-million-dollar stock sales are not a new development for Tan. He made $51 million in discretionary sales in June of 2025. He also sold over 702,000 shares, worth around $110 million, from Dec. 14, 2023, to Dec. 24, 2024. So far in 2025, he's sold less than half that number of shares; around 346,000, worth $101 million.

Thus, he appears on track to sell significantly fewer shares in 2025 compared to the prior approximately 12-month period. Still, the dollar value is on track to be higher, due to Broadcom’s 2025 surge.

Overall, as the number of shares he is selling is on pace to be lower, Tan’s 2025 sales are actually less bearish than his late-2023 to late-2024 sales. Fewer shares sold means Tan is reducing his Broadcom ownership percentage by a smaller amount, a purer measure of insider sentiment. In summary, Tan’s recent sales shouldn’t significantly alter investors' views on Broadcom.

As a note, Tan’s sale did not benefit from the stock’s Sept. 10 gain due to his pay package. He sold the shares for $336.67, Broadcom’s closing price on Sept. 9, a move that makes sense, as selling after Sept. 10 could have raised concerns about illicit insider trading.

AVGO Keeps Chugging, But Keep a Cautious Eye

Hock Tan’s compensation package is a bullish signal for shares, and his Broadcom sales look like a non-issue. Still, it’s highly arguable that the pay package should not have led to a larger gain than Broadcom’s actual earnings report.

At the end of the day, the package just represents potential, not real results. Although Broadcom is executing to a tee, investors should stay aware of potentially speculative price action like this.