Step aside, Magnificent Seven giants – there’s a new contender in town, and its name is Broadcom (NASDAQ: AVGO). While this B2B powerhouse may not be a household name like Apple or Amazon, its market cap of $590 billion now surpasses even Tesla, sparking discussions on whether it deserves a spot among the tech elite.
Broadcom’s Journey
What started as Avago Technologies has evolved into Broadcom, carving a unique niche in the semiconductor industry. By focusing on business clients and collaborative chip design, Broadcom set itself apart. Its claim to fame includes the Wi-Fi hotspot chip in the ubiquitous iPhone, highlighting its behind-the-scenes influence(NASDAQ: TSLA).
Through strategic acquisitions and a foray into enterprise software, Broadcom broadened its horizons. The recent VMWare deal catapulted its software revenue to 40%, heavily anchored in cutting-edge AI technology. With a 100% surge in stock value over the past year, Broadcom’s innovative prowess is not to be underestimated.
Broadcom’s Growth Trajectory
While Broadcom’s 2023 revenue growth of 8% may not steal the show like Nvidia’s 126% or Microsoft’s 11%, its 23% net income jump to $14 billion speaks volumes. Trading at a P/E ratio of approximately 47, Broadcom’s financials point to a robust bottom line and shareholder returns. The rise to a $21 per share dividend, up by 14%, paints a promising picture for investors, both old and new.
Those who got on the Broadcom bandwagon early have already reaped a handsome return on investment, with a juicy 140% yield. Factor in the possibility of sustained double-digit growth, and the prospect of growing dividends becomes even more enticing.
A Seat at the Magnificent Seven Table?
Amidst the buzz around Broadcom’s meteoric rise, the question lingers – does it deserve a coveted spot among tech’s Magnificent Seven? While such designations are fleeting and subject to change, one cannot ignore Broadcom’s strong fundamentals and growth trajectory. As analysts and the media ponder over Broadcom’s status, savvy investors might view it as a long-term gem in their portfolios.
So, should one take the plunge and invest in Broadcom? The answer lies in the company’s steady growth, robust financials, and dividend potential. While aficionados of the Magnificent Seven debate its inclusion, astute investors might want to keep a keen eye on Broadcom’s journey to the top.
Thinking of investing $1,000 in Broadcom?
Before diving in, consider this – while Broadcom didn’t make the Motley Fool’s top 10 stock picks, its potential for stellar returns remains intriguing. With a proven track record since 2002*, the Motley Fool Stock Advisor offers a roadmap for success with regular updates and expert recommendations, making it a valuable resource for investors seeking growth opportunities.
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Opinions expressed here are solely those of the author and do not reflect the views of Nasdaq, Inc.
