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Headquartered in California, Broadcom Inc. (AVGO) is a leading global designer and supplier of semiconductor devices, worth a market capitalization of $769.9 billion. The company specializes in complex digital and mixed-signal CMOS products, as well as analog III-V components.
Shares of this semiconductor titan have significantly outperformed the broader market over the past 52 weeks. AVGO has surged 69% over this time frame, while the broader S&P 500 Index ($SPX) has rallied 30.4%. In 2024, AVGO saw a rise of 47.7%, outpacing SPX's 23.1% rise.
Zooming in further, AVGO has surpassed the VanEck Semiconductor ETF’s (SMH) impressive 48.8% return over the past year and a 37.2% gain on a YTD basis.
Broadcom’s strong price performance is fueled by its rapidly expanding AI portfolio, which has significantly boosted demand for its networking and custom ASIC chips. AI-related revenue, which totaled $4.2 billion in fiscal 2023, is expected to surpass $11 billion this year, nearly tripling.
On Sept. 5, AVGO announced its Q3 earnings results, and its shares dropped more than 10% in the following trading session. It posted an adjusted EPS of $1.24 per share, surpassing Wall Street’s expectations. Broadcom’s revenue for the period was $13.1 billion, exceeding the Street’s forecast of $12.9 billion. For the current quarter ending in October, the company expects revenue to range around $14 billion.
For the fiscal year, ended in October, analysts expect AVGO's EPS to decline 2.1% year over year to $3.78. 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 33 analysts assessing AVGO stock, the consensus rating is "Strong Buy." That's based on 30 "Strong Buy" ratings and three "Holds.”
This configuration is slightly more bullish than two months before, with 29 analysts suggesting a "Strong Buy."
On Nov. 4, UBS Group AG (UBS) raised its price target for Broadcom from $170 to $200, maintaining a “Buy” rating on the semiconductor stock.
The mean price target of $195.71 represents a premium of 18.7% from AVGO's current levels. The Street-high price target of $240 implies a potential upside of around 45.6%.
