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Newly valued at a market cap just north of $1 trillion as of today, Broadcom (AVGO) ranks among the world's largest semiconductor companies. It offers a diverse range of hardware and software products, including enterprise software and cybersecurity solutions on the software side, as well as connectivity switches on the hardware side. Broadcom has effectively tapped into the surging demand for artificial intelligence (AI)-driven data centers with its Tomahawk 5 and Jericho 3AI switches, which have seen remarkable growth in 2024.
In today's trading, AVGO stock has spiked more than 21% as investors respond to the AI chip giant's latest quarterly earnings. Here's a closer look at Broadcom's fiscal fourth-quarter results, and what's next for this trillion-dollar tech stock.
About AVGO Stock
Broadcom stock has been a standout performer in 2024, even prior to today's post-earnings rally. AVGO is now up by 95% on a year-to-date basis, easily surpassing the broader market's returns.
In today's session, the stock is exploring new highs around $218 per share, with AVGO gapping decisively higher above recent congestion near the $185 level.
AVGO is now in short-term overbought territory, based on its 14-day Relative Strength Index (RSI) of 78, which means that investors should be wary of a potential pullback following today's breakout.
AVGO Tops Q4 Earnings Estimates
After Thursday's closing bell, Broadcom reported its earnings results for the fourth quarter of fiscal year 2024. The company raked in revenue of $14.05 billion, just shy of the $14.06 billion consensus, while adjusted earnings per share (EPS) of $1.42 topped the $1.39 forecast on Wall Street. For the full fiscal year 2024, revenue reached a record $51.6 billion, up 44% annually.
“Semiconductor revenue was a record $30.1B driven by AI revenue of $12.2B,” according to CEO Hock Tan. "AI revenue, which grew 220% year-on-year, was driven by our leading AI XPUs and Ethernet networking portfolio."
For the current first quarter, management guided for revenue of $14.6 billion, roughly in line with expectations.
Notably, on the conference call with analysts, Tan projected the serviceable addressable market for XPUs will range between $60 billion and $90 billion by fiscal 2027.
Broadcom's Dividend Hike
While Wall Street is focused on those bullish AI growth forecasts, it's also worth pointing out that Broadcom boosted its dividend. For fiscal 2025, the semiconductor giant hiked its quarterly cash dividend by 11% to $0.59 per share, thanks to robust cash flows.
"The target fiscal year 2025 annual common stock dividend of $2.36 per share is a record, and the fourteenth consecutive increase in annual dividends since we initiated dividends in fiscal 2011," noted CFO Kirsten Spears.
At current levels, that payout translates to a forward yield of about 1.07% - very respectable, for an AI-fueled growth stock like AVGO.
What Do Analysts Say About AVGO Stock?
Analysts were already firmly in the bullish camp for Broadcom ahead of last night's earnings report, with a consensus “Strong Buy” rating among the 33 experts in coverage. However, the company's upbeat long-term forecast has elicited several price-target hikes today.
Jefferies analyst Blayne Curtis reiterated a “Buy” rating on AVGO, and raised the stock's price target to $225 from $205, noting that management's “confidence level seems higher” regarding customer deployment of 1M xPU clusters.
Joseph Moore of Morgan Stanley also reiterated an “Overweight” rating, and hiked AVGO's price target to $233 from $180. "Expect momentum to build from here over the course of CY25," wrote Moore in a note to clients.
Even more ambitious is the new price target from Evercore ISI's Mark Lipacis, who thinks Wall Street isn't giving Broadcom enough credit for the upside potential in custom AI chips. The analyst backed his “Outperform” opinion on AVGO, and raised his price target to $250 from $201.
However, the new Street-high price target for Broadcom belongs to KeyBanc's John Vinh, who reiterated an “Overweight” rating alongside his price-target hike from $210 to $260. That target implies expected upside of roughly 20% from current prices.
