After the market close on Wednesday, Broadcom (AVGO) wowed investors with a stellar FY Q2 earnings report that beat Wall Street estimates. The chipmaker posted $10.96 adjusted EPS, topping the $10.84 forecast, and $12.49 billion in revenue, well above the expected $12.03 billion. The company expects around $51 billion in sales for FY 2024. This beat its own earlier forecast of $50.42 billion.
The numbers weren’t all rosy. Net income in the second quarter was $2.12 billion, $4.42 per share. Analyst expectations were for an EPS of $4.97. In the year-ago period, net income was $3.48 billion, $8.15 per share.
Broadcom also announced a 10-for-1 stock split. This plus the earnings and revenue surprises sent AVGO shares up 10% in late trading.
What's New With Broadcom?
With its hardware and software solutions, Broadcom is in a prime position to reap the biggest rewards of the AI tsunami. The company designs and manufactures semiconductors and infrastructure software—most importantly, devices that run demanding AI applications. They serve many markets, from networking and data centers to broadband, software, and industrials. Broadcom recently rolled out high-performing ethernet NICs for AI data centers and is expanding its reach in Europe with its Broadcom Advantage Partner Program for VMware Cloud Service Providers. Broadcom acquired VMware late last year. In April, the company announced an expanded partnership with Google that will, among other initiatives, integrate its products with Google Cloud’s generative AI capabilities to enhance the user experience and streamline operations.
What The Analysts Are Saying
Analyst reactions to the numbers and stock split were upbeat across the board. At least 29 investment firms increased price targets following the news. Vivek Arya of Bank of America Securities called Broadcom a “top 2 AI pick” alongside Nvidia, raising his price target from $1,680 to $2,000. Barclays raised its price target from $1,500 to $2,000 and maintained its overweight rating. Blayne Curtis at Jefferies believes Broadcom’s AI revenue projection of $11 billion for the full year is “conservative.” The consensus rating from 27 analysts has Broadcom as a Strong Buy.
Neither Julie Stoller nor Stocks.News have positions in this company.
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Contributing Writer
As a professional writer since 2012, Julie Stoller has covered many industries, from healthcare and technology to consumer products and industrials. She has written about IPOs, spinoffs, ETFs, stock splits, commodities, legislative actions impacting investors, and macroeconomic issues. While keeping up with the latest meme stocks and trends, Julie's special interests are discovering ...