Broadcom Inc.: A Dominant Force in Semiconductors with Soaring Stock Performance
Company Overview and Market Performance
Based in California, Broadcom Inc. (AVGO) stands at the forefront of semiconductor design and supply, boasting a market capitalization of $769.9 billion. The firm specializes in digital and mixed-signal CMOS products, along with analog III-V components.
Stock Performance Versus Market Indices
Over the past 52 weeks, Broadcom has significantly outperformed the market. Its stock surged by 69%, while the broader S&P 500 Index ($SPX) increased by 30.4%. In 2024 alone, AVGO’s shares gained 47.7%, compared to the SPX’s rise of 23.1%.
Comparison with the Semiconductor Sector
Looking closely at performance, Broadcom exceeded the VanEck Semiconductor ETF’s (SMH) return of 48.8% over the year and a 37.2% gain year-to-date.
Impact of AI on Revenue Growth
Broadcom’s impressive stock performance is largely attributed to its rapidly growing AI portfolio, which has driven increased demand for its networking and custom ASIC chips. AI-related revenue, which reached $4.2 billion in fiscal 2023, is projected to soar past $11 billion this year—almost a threefold increase.
Q3 Earnings Results and Market Reaction
On Sept. 5, AVGO released its Q3 earnings, and shares fell over 10% in the subsequent trading session. The company reported an adjusted EPS of $1.24, exceeding Wall Street’s expectations. Revenue for the quarter was $13.1 billion, surpassing the forecast of $12.9 billion. For the current quarter ending in October, Broadcom anticipates revenue of about $14 billion.
Analyst Expectations for Fiscal Year
For the fiscal year ending in October, analysts project a slight EPS decline of 2.1% to $3.78. Broadcom’s earnings surprise record is mixed; the company has met or beaten expectations in three of the last four quarters but did fall short once.
Analyst Ratings and Price Targets
Among the 33 analysts evaluating AVGO stock, the consensus rating stands at “Strong Buy,” comprised of 30 “Strong Buy” ratings and three “Holds.”
This outlook shows a more bullish sentiment than two months prior when 29 analysts recommended a “Strong Buy.”
Recent Price Target Adjustments
On Nov. 4, UBS Group AG (UBS) raised its price target for Broadcom from $170 to $200, keeping a “Buy” rating for the semiconductor stock. The average price target now stands at $195.71, indicating an expected rise of 18.7% from current levels. The highest target among analysts is $240, suggesting a potential gain of around 45.6%.
On the date of publication, Kritika Sarmah did not hold (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article are for informational purposes only. For more details, please view the Barchart Disclosure Policy here.
The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
