Broadcom stock rose Tuesday after the fabless chipmaker and infrastructure software provider announced a $10 billion share repurchase authorization.
The Palo Alto, Calif.-based company revealed the stock buyback plan late Monday. The share repurchase authorization runs through the end of the year.
The stock buyback plan reflects the company's confidence in its diversified semiconductor and infrastructure software product offerings, Chief Executive Hock Tan said in a news release.
"In particular, we are uniquely positioned in mission-critical infrastructure software and enabling hyperscalers to drive innovation in generative AI into their expanding subscriber platforms," he said.
Deutsche Bank analyst Ross Seymore on Tuesday reiterated his buy rating on Broadcom stock with a price target of 205.
On the stock market today, Broadcom stock advanced 1.2% to close at 156.03.
"In general, we view this new authorization favorably as, despite its relatively small size (a bit more than 1% of Broadcom's market cap), it signals the company's confidence in its business during tumultuous times and a willingness to diversify its cash usage beyond debt repayment (likely to continue) and dividends (likely to increase annually) to now include share repurchases as well," Seymore said in a client note.
Broadcom could have announced a larger buyback authorization but probably wanted to "keep some dry power in reserve for M&A down the road," Mizuho Securities trading-desk analyst Jordan Klein said in a client note.
"CEO Hock Tan views his stock as the best acquisition out there right now at $155 per share (at Monday's close) in terms of strategic value and return on capital for investors," Klein said.
Marvell Sells Auto Ethernet Business
Elsewhere among semiconductor stocks, Marvell Technology announced the sale of its noncore automotive ethernet business to Infineon for $2.5 billion in cash.
Marvell's auto ethernet business is expected to generate revenue of $225 million to $250 million in fiscal 2026, the company said in a news release.
The divestiture will allow Marvell to focus more on its data center infrastructure business, Marvell Chief Executive Matt Murphy said in a statement.
On Tuesday, Marvell stock fell 1.9% to close at 50.03.
Rosenblatt Securities analyst Kevin Cassidy said the transaction makes "good sense" for both companies.
"The data infrastructure market has grown to about 75% of Marvell's total revenue in fiscal Q4 and we see room for additional growth with further investment," Cassidy said in a client note. "With over 50% revenue exposure to the automotive market, Infineon can add important ethernet products and design wins to its product lineup."
Cassidy rates Marvell stock as buy with a 12-month price target of 140.
Marvell stock ranks No. 13 out of 39 stocks in IBD's fabless semiconductor industry group, according to IBD Stock Checkup. Broadcom stock ranks second in the group.
Follow Patrick Seitz on X, formerly Twitter, at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
