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Based in California, Broadcom Inc. (AVGO), with an impressive market cap of $771.4 billion, is a leading designer and global supplier of a wide range of semiconductor devices, focusing on complex digital and mixed-signal CMOS-based products and analog III-V products.
Shares of this semiconductor titan have significantly outperformed the broader market over the past 52 weeks. AVGO has surged 99% over this time frame, while the broader S&P 500 Index ($SPX) has rallied 26.1%. In 2024, AVGO saw a rise of 48.5%, outpacing SPX's 16.5% rise.
Zooming in further, AVGO has surpassed the VanEck Semiconductor ETF’s (SMH) impressive 68.4% return over the past year and a 40.9% gain on a YTD basis.
Broadcom’s robust price performance stems from its rapidly growing AI portfolio, which has driven significant demand for its networking and custom ASIC chips. AI-related revenue, which was $4.2 billion in fiscal 2023, is now projected to exceed $11 billion this year, nearly tripling. Besides, the company is expected to reach the $1 trillion market cap benchmark by next year. Additionally, the successful integration of VMware, acquired for $69 billion last November, has contributed to cost reductions and accelerated revenue.
On July 15, AVGO surged over 5%, fueled by signs of a strengthening U.S. economy.
Following its Q2 earnings release on June 12, AVGO stock surged over 20% in the subsequent trading sessions. The company not only exceeded both revenue and earnings expectations but also announced a 10-for-1 stock split, which delighted investors.
For the current fiscal year, ending in October, analysts expect AVGO's EPS to decline 3.1% year over year to $3.74. However, the company's earnings surprise history is mixed. It beat or met the consensus estimates in three of the last four quarters while falling short on another occasion.
Out of the 32 analysts assessing AVGO stock, the consensus rating is "Strong Buy." That's based on 29 "Strong Buy" ratings and three "Holds.”
This configuration is slightly more bullish than two months before, with 27 analysts suggesting a "Strong Buy."
On Jul. 16, TD Cowen analyst maintained its "Buy" rating on Broadcom and raised the price target to $210 from the previous split-adjusted target of $175.
The mean price target of $190.51 represents a premium of 15% from AVGO's current levels. The Street-high price target of $240 implies a potential upside of around 44.8%.
On the date of publication, Kritika Sarmah did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
