Broadcom (AVGO) AI Stock Analysis

• Market Cap: $1.20T
• Dividend Yield: 0.95%
• Average Volume (3M): 21.24M
• Price to Earnings (P/E): 93.5
• Beta (1Y): 2.37
• Revenue Growth: 33.85%
• EPS Growth: 14.43%
• Country: US
• Employees: 37,000
• Sector: Technology
• Sector Strength: 79
• Industry: Semiconductors
• EPS (TTM): 1.58
• Shares Outstanding: 4,703,471,000
• 10 Day Avg. Volume: 28,751,785
• 30 Day Avg. Volume: 21,240,961
• PEG Ratio: -0.58
• Price to Book (P/B): 4.86
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 13.10
• Enterprise Value/Market Cap: 0.12
• Enterprise Value/Revenue: 0.71
• Enterprise Value/Gross Profit: 3.96
• Enterprise Value/Ebitda: 1.54
• 1Y Price Target: $289.60
• Price Target Upside: 16.45% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 29

• Rating: 80 Outperform
• Price Target: $284.00 ▲(14.19%Upside)

Broadcom scores highly due to its strong financial performance, driven by robust growth in AI segments and solid profitability. The earnings call provided positive guidance, reinforcing confidence in future growth. However, high valuation metrics and debt levels warrant caution despite the company's optimistic outlook.

Positive Factors

Earnings

Forecasting AI revenue to grow to $5.1B, better than prior estimates, indicating strong future growth potential.

Financial Performance

Improving financials underscore the right strategic direction, with a shift towards software improving margins and consistent free cash flows.

Product Innovation

Next-gen Tomahawk 6 switch is seeing tremendous demand, indicating strong product innovation and market interest.

Negative Factors

Customer Concentration

Custom chip programs by nature tend to be lumpy with high customer concentration risks, as seen with AVGO & Google.

Market Risks

Key risks include the risk of non-accretive acquisitions, relatively high leverage, and a potential slowdown in AI growth momentum.

Product Mix

GMs were quite strong in the quarter at 79.4% but guided 130 bps lower as mix to AI and further into ASICs hurts mix, which should be a LT headwind.

Broadcom Business Overview & Revenue Model

Company Description

Broadcom Inc. designs, develops, and supplies various semiconductor devices with a focus on complex digital and mixed signal complementary metal oxide semiconductor based devices and analog III-V based products worldwide. The company operates in two segments, Semiconductor Solutions and Infrastructure Software. It provides set-top box system-on-chips (SoCs); cable, digital subscriber line, and passive optical networking central office/consumer premise equipment SoCs; wireless local area network access point SoCs; Ethernet switching and routing merchant silicon products; embedded processors and controllers; serializer/deserializer application specific integrated circuits; optical and copper, and physical layers; and fiber optic transmitter and receiver components. The company also offers RF front end modules, filters, and power amplifiers; Wi-Fi, Bluetooth, and global positioning system/global navigation satellite system SoCs; custom touch controllers; serial attached small computer system interface, and redundant array of independent disks controllers and adapters; peripheral component interconnect express switches; fiber channel host bus adapters; read channel based SoCs; custom flash controllers; preamplifiers; and optocouplers, industrial fiber optics, and motion control encoders and subsystems. Its products are used in various applications, including enterprise and data center networking, home connectivity, set-top boxes, broadband access, telecommunication equipment, smartphones and base stations, data center servers and storage systems, factory automation, power generation and alternative energy systems, and electronic displays. Broadcom Inc. was incorporated in 2018 and is headquartered in San Jose, California.

How the Company Makes Money

Broadcom Inc. makes money primarily through the sale of its semiconductor products and infrastructure software solutions. The company generates revenue through two main segments: Semiconductor Solutions and Infrastructure Software. The Semiconductor Solutions segment involves the design and sale of semiconductor devices, which are used in applications like data center networking, broadband access, and wireless communications. The Infrastructure Software segment includes revenue from the licensing and support of software for mainframe, cybersecurity, and enterprise automation. Broadcom's earnings are bolstered by its strategic partnerships with leading technology companies and its continuous investment in research and development to innovate and expand its product offerings.

Broadcom Financial Statement Overview

Summary

Broadcom demonstrates strong financial performance with robust revenue growth, excellent profitability, and efficient cash flow generation. The company's financial position is solid, with high return on equity and strong cash metrics. However, relatively high debt levels present potential risks.

Income Statement

Broadcom has shown robust growth in revenue and profitability. The gross profit margin stands at 66.1% and net profit margin at 22.6% for TTM, reflecting solid profitability. Revenue growth rate is a healthy 10.6%, and both EBIT and EBITDA margins are strong at 35.9% and 45.1% respectively, indicating effective cost management and operational efficiency.

Balance Sheet

The balance sheet is strong with a debt-to-equity ratio of 0.97, suggesting a balanced capital structure. The return on equity (ROE) is impressive at 18.6%, reflecting efficient use of equity capital. The equity ratio is 42.3%, showing a solid equity base relative to total assets. However, the total debt remains relatively high.

Cash Flow

Cash flow generation is robust, with a free cash flow growth rate of 16.9% indicating strong cash generation capabilities. The operating cash flow to net income ratio is 1.8, which is healthy, reflecting strong cash conversion from earnings. The free cash flow to net income ratio is 1.76, showing efficient cash utilization.

Breakdown
TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
57.05B	51.57B	35.82B	33.20B	27.45B	23.89B
	Gross Profit
37.70B	32.51B	24.69B	22.09B	16.84B	13.52B
	EBIT
20.50B	13.46B	16.21B	14.22B	8.52B	4.01B
	EBITDA
25.72B	23.88B	20.55B	19.16B	14.69B	11.13B
	Net Income Common Stockholders
12.92B	5.89B	14.08B	11.49B	6.74B	2.96B
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
9.47B	9.35B	14.19B	12.42B	12.16B	7.62B
	Total Assets
164.63B	165.65B	72.86B	73.25B	75.57B	75.93B
	Total Debt
67.28B	67.57B	39.23B	39.52B	39.73B	41.06B
	Net Debt
57.81B	58.22B	25.04B	27.10B	27.57B	33.44B
	Total Liabilities
95.04B	97.97B	48.87B	50.54B	50.58B	52.03B
	Stockholders Equity
69.59B	67.68B	23.99B	22.71B	24.99B	23.90B
Cash Flow		Free Cash Flow
22.70B	19.41B	17.63B	16.31B	13.32B	11.60B
	Operating Cash Flow
23.23B	19.96B	18.09B	16.74B	13.76B	12.06B
	Investing Cash Flow
2.81B	-23.07B	-689.00M	-667.00M	-245.00M	-11.11B
	Financing Cash Flow
-26.38B	-1.73B	-15.62B	-15.82B	-8.97B	1.61B

Broadcom Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 248.70
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For AVGO, the sentiment is Positive. The current price of 248.7 is above the 20-day moving average (MA) of 242.96, above the 50-day MA of 210.45, and above the 200-day MA of 195.80, indicating a bullish trend. The MACD of 11.02 indicates Positive momentum. The RSI at 60.82 is Neutral, neither overbought nor oversold. The STOCH value of 50.57 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for AVGO.

Broadcom Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
ASML	81 Outperform	$303.09B	32.05	55.21%	1.10%	16.46%	21.29%
AMD	81 Outperform	$192.14B	85.15	3.90%	―	21.71%	99.00%
AVGO	80 Outperform	$1.20T	93.49	18.98%	0.95%	33.85%	14.43%
QCOM	80 Outperform	$174.25B	15.76	42.21%	2.24%	16.15%	32.28%
TXN	74 Outperform	$181.39B	36.95	29.04%	2.72%	-4.48%	-17.82%
Sector *	62 Neutral	$11.97B	10.08	-7.46%	2.96%	7.37%	-8.22%
INTC	49 Neutral	$90.21B	―	-18.66%	2.41%	-3.97%	-562.40%

Broadcom Corporate Events

Broadcom Reports Strong Q2 2025 Financial Results

On June 5, 2025, Broadcom Inc. announced its financial results for the second quarter of fiscal year 2025, reporting a 20% year-over-year increase in revenue to $15 billion. The company also declared a quarterly cash dividend of $0.59 per share, payable on June 30, 2025. Broadcom’s AI semiconductor solutions showed significant growth, contributing to the record revenue, and the company provided optimistic guidance for the third quarter, expecting further growth in AI semiconductor revenue.

The most recent analyst rating on (AVGO) stock is a Buy with a $190.00 price target. To see the full list of analyst forecasts on Broadcom stock, see the AVGO Stock Forecast page.