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Broadcom Inc. (AVGO), headquartered in Palo Alto, California, is a global technology leader that designs, develops, and supplies various semiconductor devices, focusing on complex digital and mixed signal complementary metal oxide semiconductor-based devices and analog III-V-based products. With a market cap of $711.2 billion, the company offers storage adapters, controllers, networking processors, motion control encoders, optical sensors, infrastructure, and security software to modernize, optimize, and secure the most complex hybrid environments.
Companies worth $200 billion or more are generally described as “mega-cap stocks,” and AVGO definitely fits that description, with its market cap exceeding this threshold, reflecting its substantial size, influence, and dominance in the semiconductors industry. Broadcom is deeply focused on key areas like cloud computing, data centers, networking, broadband, and wireless communications, making it a significant player in advancing the 5G and AI revolution.
Despite its notable strengths, Broadcom slipped 17.5% from its 52-week high of $185.16, achieved on Jun. 18. Over the past three months, AVGO stock gained 15.6%, outperforming the S&P 500 Index’s ($SPX) 4.7% gains during the same time frame.
In the longer term, shares of Broadcom rose 36.9% on a YTD basis and climbed 75.1% over the past 52 weeks, outperforming SPX’s YTD gains of 15.9% and 22.4% returns over the last year.
To confirm the bullish trend, AVGO has mostly traded above its 100-day and 200-day moving averages for the past year, with slight fluctuations.
AVGO's solid price performance can be attributed to its expanding AI and Gen AI offerings, as well as its growing clientele, which includes major companies like Alphabet Inc. (GOOGL) and Meta Platforms (META). The acquisition of VMware has expanded AVGO's hybrid cloud portfolio and accelerated app delivery. Besides implementing a 10-for-1 stock split, the company's networking business has seen a boost in demand for ethernet switches to support fast connectivity in data centers for AI workloads.
On Jun. 12, AVGO reported its Q2 results, and its shares closed up more than 12% in the following trading session. Its adjusted EPS of $10.96 exceeded Wall Street expectations of $10.79. The company’s revenue was $12.5 billion, beating Wall Street forecasts of $12 billion. AVGO expects full-year revenue to be $51 billion, above the consensus of $50.6 billion.
Broadcom’s rival, Advanced Micro Devices, Inc. (AMD) shares lagged behind the stock, with a 7.1% dip on a YTD basis and a 25.1% gain over the past 52 weeks.
Wall Street analysts are highly optimistic about Broadcom’s prospects. The stock has a consensus “Strong Buy” rating from the 32 analysts covering it, and the mean price target of $190.51 suggests a potential upside of 24.7% from current price levels.
On the date of publication, Neha Panjwani 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.
