Broadcom (AVGO) AI Stock Analysis

• Market Cap: $878.27B
• Dividend Yield: 1.16%
• Average Volume (3M): 29.70M
• Price to Earnings (P/E): 151.9
• Beta (1Y): 2.35
• Revenue Growth: 43.99%
• EPS Growth: -62.55%
• Country: US
• Employees: 37,000
• Sector: Technology
• Sector Strength: 48
• Industry: Semiconductors and Equipment
• EPS (TTM): 1.22
• Shares Outstanding: 4,687,356,000
• 10 Day Avg. Volume: 28,689,010
• 30 Day Avg. Volume: 29,702,834
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): 17.03
• Price to Cash Flow (P/CF): 39.20
• P/FCF Ratio: 34.30
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $242.67
• Price Target Upside: 29.44% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 25

Broadcom's robust financial performance and positive earnings call sentiment are key strengths, highlighting its strong position in the semiconductor industry. However, the high P/E ratio suggests overvaluation, and the technical indicators point to potential short-term weakness. These factors result in a moderate overall stock score.

Positive Factors

AI Infrastructure

Broadcom is seen as one of the biggest beneficiaries of AI fabric build-outs, as networking acts as a key bottleneck in AI training clusters.

Financial Performance

Broadcom's successful integration of its acquisitions is evidenced in its improving financials, with a 10-year CAGR of 28% for revenue and 35% for EBITDA.

Negative Factors

Apple Chip Development

There is a focus on management commentary around reports that Apple is planning to switch away from Broadcom to internally developed custom chips.

Broadcom Business Overview & Revenue Model

Company Description

Broadcom, Inc. is a technology company offering semiconductor and infrastructure software solutions. It operates through two segments: Semiconductor Solutions (includes semiconductor solution product lines and IP licensing) and Infrastructure Software (Includes mainframe, BizOps and cyber security software solutions and FC SAN business). The company was founded in 1961 and is headquartered in San Jose, CA.

How the Company Makes Money

Broadcom makes money through the sale of its semiconductor solutions and infrastructure software. The semiconductor solutions segment generates revenue by providing products for wired infrastructure, wireless communications, enterprise storage, and industrial markets. These products include chips and components for networking, broadband, and wireless communication devices. The infrastructure software segment contributes to revenue through licensing fees and support services for its software solutions, which cater to data center, mainframe, cybersecurity, and enterprise markets. Additionally, Broadcom engages in strategic partnerships and acquisitions to bolster its technology offerings and expand its market reach, contributing to its financial growth.

Broadcom Financial Statement Overview

Summary

Broadcom shows strong financial performance with significant revenue growth, solid profitability margins, and robust cash flow generation. Moderate debt and substantial cash reserves provide financial flexibility, although there's room for improvement in cost management.

Income Statement

Broadcom demonstrates strong financial performance with a robust gross profit margin of 63.0% and a solid net profit margin of 11.4% for the latest period. The company has achieved consistent revenue growth, notably a 44.0% increase from the previous year. EBIT and EBITDA margins are healthy at 26.1% and 46.0%, respectively, indicating efficient operational management. However, a decline in EBIT suggests room for improvement in cost management.

Balance Sheet

The balance sheet reveals a moderate debt-to-equity ratio of 1.0, signaling manageable leverage levels. The return on equity stands at 8.7%, reflecting moderate profitability from shareholder investments. An equity ratio of 40.9% indicates a strong asset base supported by equity. The company maintains a substantial cash position, providing a buffer against potential liabilities. However, the increase in total debt warrants careful monitoring.

Cash Flow

Broadcom's cash flow statement highlights excellent free cash flow growth at 10.1%, driven by robust operating cash flow. The operating cash flow to net income ratio of 3.4 suggests strong cash generation relative to reported earnings. The free cash flow to net income ratio of 3.3 indicates effective cash management and reinvestment capabilities. These metrics underscore the company's strong liquidity position and cash flow stability.

Breakdown
Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
51.57B	35.82B	33.20B	27.45B	23.89B
	Gross Profit
32.51B	24.69B	22.09B	16.84B	13.52B
	EBIT
13.46B	16.21B	14.22B	8.52B	4.01B
	EBITDA
23.72B	20.55B	19.16B	14.69B	11.13B
	Net Income Common Stockholders
5.89B	14.08B	11.49B	6.74B	2.96B
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
9.35B	14.19B	12.42B	12.16B	7.62B
	Total Assets
165.65B	72.86B	73.25B	75.57B	75.93B
	Total Debt
67.57B	39.23B	39.52B	39.73B	41.06B
	Net Debt
58.22B	25.04B	27.10B	27.57B	33.44B
	Total Liabilities
97.97B	48.87B	50.54B	50.58B	52.03B
	Stockholders Equity
67.68B	23.99B	22.71B	24.99B	23.90B
Cash Flow		Free Cash Flow
19.41B	17.63B	16.31B	13.32B	11.60B
	Operating Cash Flow
19.96B	18.09B	16.74B	13.76B	12.06B
	Investing Cash Flow
-23.07B	-689.00M	-667.00M	-245.00M	-11.11B
	Financing Cash Flow
-1.73B	-15.62B	-15.82B	-8.97B	1.61B

Broadcom Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 187.48
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For AVGO, the sentiment is Negative. The current price of 187.48 is below the 20-day moving average (MA) of 219.20, below the 50-day MA of 224.73, and above the 200-day MA of 178.82, indicating a neutral trend. The MACD of -8.25 indicates Positive momentum. The RSI at 32.14 is Neutral, neither overbought nor oversold. The STOCH value of 12.30 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for AVGO.

Broadcom Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
QCOM	76 Outperform	$173.83B	16.80	39.27%	2.13%	12.13%	36.17%
NVDA	75 Outperform	$2.83T	39.48	91.87%	0.03%	114.20%	146.26%
AMD	73 Outperform	$161.82B	97.92	2.85%	―	13.69%	91.75%
TXN	70 Outperform	$177.37B	37.50	28.39%	2.74%	-10.72%	-26.60%
AVGO	67 Neutral	$878.27B	151.86	8.71%	1.16%	43.99%	-62.55%
Sector *	59 Neutral	$22.39B	11.53	-18.05%	2.31%	5.00%	-25.89%
INTC	54 Neutral	$92.36B	―	-18.89%	2.11%	-2.08%	-1212.72%

Broadcom Corporate Events

Broadcom Secures $7.5 Billion Credit Facility

Broadcom Inc. has entered into a new credit agreement that establishes a $7.5 billion five-year unsecured revolving credit facility with Bank of America and other lenders. This facility will be used for general corporate purposes, replacing an existing credit agreement, and includes provisions for issuing multicurrency letters of credit, although no borrowings were outstanding on the closing date.