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Broadcom Inc. (AVGO), headquartered in Palo Alto, California, designs, develops, and supplies a broad range of semiconductor, enterprise software, and security solutions. Valued at $654.86 billion by market cap, the company’s product portfolio services critical markets, including cloud, data center, networking, broadband, wireless, storage, industrial, and enterprise software.
Companies worth $200 billion or more are generally described as “mega-cap stocks,” and AVGO fits right into that category. The company’s solutions include service provider and enterprise networking and storage, mobile device and broadband connectivity, mainframe, cybersecurity, and private and hybrid cloud infrastructure.
However, the tech giant has fallen 3.1% from its 52-week high of $1,445.40, which it hit on May 16. Shares of AVGO are up 3.8% over the past three months, underperforming the Semiconductor iShares ETF’s (SOXX) 4.7% gains over the same time frame.
Longer term, AVGO shares rose 77.4% over the past year, and in 2024, the stock is up 25.5%. By contrast, the SOXX is up 25.4% on a YTD basis and 49.8% over the past 52 weeks.
To confirm the bullish price trend, AVGO has been trading above its 50-day moving average since early June and above its 200-day moving average since December 2022.
AVGO shares fell nearly 6% in the session after the company reported its Q1 results. The fall could be attributed to the company’s failure to raise its guidance despite the robust demand for AI products and the integration of its acquisition of VMware. At the midpoint, it maintained its full-year revenue guidance of $50 billion and $30 billion in adjusted EBITDA.
The company’s revenue rose 34.2% year over year to $11.96 billion, exceeding consensus estimates of $11.72 billion. Its non-GAAP EPS came in at $10.99, surpassing analyst estimates of $10.42, and its outstanding inventory days fell from 71 in the previous quarter to 38.
AVGO’s overall outperformance can be attributed to the strong growth of its semiconductor segment, as demand for its networking products used in AI data centers and custom AI accelerators from hyperscalers has been robust.
To emphasize the stock’s overall outperformance, top rival Intel Corporation (INTC) has underperformed – not just AVGO but also the broader industry. INTC stock has declined 1.7% in the past 52 weeks and 39.5% on a YTD basis.
Despite its recent underperformance compared to SOXX, analysts are optimistic about AVGO’s prospects. The stock has a consensus rating of “Strong Buy” from the 29 analysts covering it, and the mean price target of $1,560.60 is an 11.4% premium to current levels.
On the date of publication, Dipanjan Banchur 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.
