Broadcom (AVGO) AI Stock Analysis

• Market Cap: $1.39T
• Dividend Yield: 0.79%
• Average Volume (3M): 17.08M
• Price to Earnings (P/E): 110.9
• Beta (1Y): 2.33
• Revenue Growth: 33.85%
• EPS Growth: 14.43%
• Country: US
• Employees: 37,000
• Sector: Technology
• Sector Strength: 87
• Industry: Semiconductors
• EPS (TTM): 1.58
• Shares Outstanding: 4,703,471,000
• 10 Day Avg. Volume: 16,696,066
• 30 Day Avg. Volume: 17,077,225
• PEG Ratio: N/A
• Price to Book (P/B): 0.00
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 0.00
• Enterprise Value/Market Cap: 0.75
• Enterprise Value/Revenue: 18.24
• Enterprise Value/Gross Profit: 27.60
• Enterprise Value/Ebitda: 34.53
• 1Y Price Target: $307.52
• Price Target Upside: 6.19% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 30

• Rating: 79 Outperform
• Price Target: $350.00 ▲(20.86% Upside)

Broadcom's strong financial performance and positive earnings call sentiment are the primary drivers of its high score. The company's robust growth in AI and software segments, coupled with effective cost management, supports a positive outlook. However, the high P/E ratio suggests potential overvaluation, and the high beta indicates volatility, which slightly tempers the overall score.

Positive Factors

AI and Networking Growth

Broadcom's AI networking and XPU franchises have a strong growth outlook, signaling confidence in the company's future performance.

AI Infrastructure

Broadcom continues to demonstrate its strong positioning in the AI infrastructure ecosystem, especially.

Negative Factors

Gross Margin Concerns

Gross margin is expected to decline sequentially due to margin dilution from higher XPU revenue.

Investor Sentiment

Investors may be disappointed at limited incremental comments on XPU engagements and previously disclosed SAM.

Broadcom Business Overview & Revenue Model

Company Description

Broadcom Inc. (AVGO) is a global technology company that designs, develops, and supplies a broad range of semiconductor and infrastructure software solutions. Operating in multiple sectors, including wired and wireless communication, enterprise storage, and industrial applications, Broadcom's core products encompass networking chips, broadband modems, and storage controllers, as well as a suite of software solutions for enterprise security and networking. The company serves a diverse customer base, from large data centers to consumer electronics manufacturers, positioning itself as a key player in the semiconductor industry.

How the Company Makes Money

Broadcom generates revenue primarily through the sale of its semiconductor products and infrastructure software solutions. Its revenue model is diversified, with significant contributions from various segments, including networking, broadband, enterprise storage, and wireless communication. Key revenue streams include the sale of ASICs (Application-Specific Integrated Circuits), optical sensors, and Wi-Fi chips, along with software licensing and support services. Additionally, Broadcom benefits from strategic partnerships with major technology firms and telecom companies, which help to secure long-term contracts and enhance its market presence. The company's robust R&D investments also enable the continuous development of innovative products, further driving its earnings growth.

Broadcom Financial Statement Overview

Summary

Broadcom exhibits strong financial performance with robust growth in revenue and profitability, solid profitability margins, and strong cash flow generation. Despite a relatively high debt level, the high return on equity and efficient cash utilization mitigate the 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	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
EBITDA	23.88B	20.55B	19.16B	14.69B	11.13B
Net Income	5.89B	14.08B	11.49B	6.74B	2.96B
Balance Sheet
Total Assets	165.65B	72.86B	73.25B	75.57B	75.93B
Cash, Cash Equivalents and Short-Term Investments	9.35B	14.19B	12.42B	12.16B	7.62B
Total Debt	67.57B	39.65B	39.98B	40.27B	41.69B
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: Positive
• Last Price: 289.60
• 50DMA: Positive
• 100DMA: Positive
• 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 Positive. The current price of 289.6 is below the 20-day moving average (MA) of 299.64, above the 50-day MA of 281.54, and above the 200-day MA of 222.53, indicating a neutral trend. The MACD of 4.79 indicates Positive momentum. The RSI at 46.53 is Neutral, neither overbought nor oversold. The STOCH value of 19.37 is Positive, 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	$289.98B	28.47	56.14%	0.90%	27.09%	40.94%
AVGO	79 Outperform	$1.39T	110.86	18.98%	0.79%	33.85%	14.43%
QCOM	78 Outperform	$168.59B	15.07	44.62%	2.21%	15.82%	34.20%
AMD	78 Outperform	$270.28B	95.09	4.70%	―	27.17%	108.67%
TXN	70 Outperform	$178.14B	35.82	29.84%	2.71%	3.62%	-5.27%
Sector *	61 Neutral	$35.38B	6.84	-10.99%	1.97%	8.74%	-8.28%
INTC	58 Neutral	$110.78B	―	-19.24%	0.49%	-3.72%	-2120.70%

Broadcom Corporate Events

Broadcom Repays Credit Facility with Senior Notes

On July 11, 2025, Broadcom Inc. repaid all outstanding obligations under its existing credit agreement, which originally provided a $30.4 billion term loan credit facility. This repayment was facilitated by the issuance of $6 billion in senior notes, consisting of notes due in 2030, 2032, and 2035, which were sold to underwriters including J.P. Morgan Securities, Morgan Stanley, and Wells Fargo Securities. The move to issue senior notes and repay the credit facility reflects Broadcom’s strategic financial management and could impact its financial positioning by potentially reducing interest expenses and altering its debt structure.

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.