Free Trial

Broadcom Confirmed Its AI Outlook: Stock to Hit New Highs Soon

April 09th 2024 , San Jose, California. Close up on logo of Broadcom Inc. on the screen of an exchange. Broadcom Inc price stocks, $AVGO on a device. — Stock Editorial Photography

Key Points

  • Broadcom's beat-and-raise quarter affirms the outlook for custom chip demand and long-term growth.
  • Robust free cash flow allowed for debt reduction and equity gains to help drive shareholder value.
  • Analysts are lifting their price targets and leading this market to a new all-time high. 
  • Five stocks to consider instead of Broadcom.
Remove Ads

Broadcom Today

Broadcom Inc. stock logo
AVGOAVGO 90-day performance
Broadcom
$152.88 +6.59 (+4.51%)
As of 11:06 AM Eastern
This is a fair market value price provided by Polygon.io. Learn more.
52-Week Range
$119.76
$251.88
Dividend Yield
1.54%
P/E Ratio
125.00
Price Target
$231.48

Broadcom’s NASDAQ: AVGO 2025 price correction is over. Driven by an aggressive forecast for custom AI chips and concerns about geopolitical and economic headwinds, the FQ1 2025 earnings results were better than expected, compounded by improved guidance that has the market rebounded strongly. Because the upswing in business is tied to the AI upgrade cycle, which is still in its earliest phases, results will likely remain strong in 2025 and drive this market to a new all-time high. 

The analysts’ response to the news is favorable. The first half dozen revisions tracked by MarketBeat include a single price target reduction offset by five increases, and all new price targets equate to a new all-time high. The price target increases put this market in the $260 to $275 range, a 30% to 35% upside from the 150-day EMA in early March. That move could happen quickly.

Broadcom Surges On Beat-and-Raise Report, Confirms Uptrend

Broadcom had a solid quarter in FQ1, with revenue growing nearly 25% to $14.92 billion. The gains were driven by strength in both primary segments and outpaced the consensus estimates by a wide 225 basis point margin. 

Broadcom MarketRank™ Stock Analysis

Overall MarketRank™
99th Percentile
Analyst Rating
Moderate Buy
Upside/Downside
50.6% Upside
Short Interest Level
Healthy
Dividend Strength
Strong
Environmental Score
-1.45
News Sentiment
1.08mentions of Broadcom in the last 14 days
Insider Trading
Selling Shares
Proj. Earnings Growth
18.59%
See Full Analysis

Semiconductor Solutions grew by an NVIDIA-like NASDAQ: NVDA 77%, driven by demand for AI, while Infrastructure Software increased by 47%. Other good news includes wider margins aided by revenue leverage and efficiency and record-setting top and bottom line figures. 

The margin news is good. The company delivered leverage results in all comparisons, with critical data such as adjusted earnings and free cash flow rising by 45% and 28%, respectively. Free cash flow came in at 40% of revenue and is expected to remain robust in F2025. 

Guidance is another factor that leads to improved bullish sentiment. The company explicitly stated that AI strength would continue in Q2, driven by hyperscalers like Alphabet NASDAQ: GOOGL, which has committed billions to building advanced data centers to support AI needs.

Remove Ads

The guidance for Q2 includes revenue growth near 20%, better-than-expected top-line results, and a high likelihood of being cautious, given the expectation for flat results sequentially. 

Broadcom’s Cash Flow, Balance Sheet Improvement, and Capital Return Drive Shareholder Value

Broadcom’s cash flow allowed for significant balance sheet improvement while investing in growth and returning capital to shareholders. Q1 highlights include flat cash and assets despite debt reduction and reduced liability, ample liquidity, and declining leverage. Total leverage is less than 1.4x equity, equity is up 13% for the quarter, and additional gains are expected as the year progresses.

Regarding capital return, the company doesn't repurchase significant amounts of stock but pays a solid and reliable dividend. It is worth about 1.3% with shares near $200, and the distribution is expected to grow annually. The company has increased for 15 consecutive years and paid less than 40% of Q1 earnings to investors. 

Broadcom Confirms Trend With Post-Release Surge

Broadcom stock surged as much as 10% in premarket trading following the Q1 release. The move shows strong support at a critical level that aligns with a prior market top and uptrend. Because of the indicators, the market will likely continue higher and may set a new all-time high in this scenario. The MACD indicator, in particular, shows strength and convergence with the latest high, a signal that it will be retested or exceeded. 

Broadcom AVGO stock chart

Should You Invest $1,000 in Broadcom Right Now?

Before you consider Broadcom, you'll want to hear this.

MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Broadcom wasn't on the list.

While Broadcom currently has a Moderate Buy rating among analysts, top-rated analysts believe these five stocks are better buys.

View The Five Stocks Here

10 Best Cheap Stocks to Buy Now Cover

MarketBeat just released its list of 10 cheap stocks that have been overlooked by the market and may be seriously undervalued. Enter your email address and below to see which companies made the list.

Get This Free Report
Thomas Hughes
About The Author

Thomas Hughes

Contributing Author

Technical and Fundamental Analysis

Like this article? Share it with a colleague.

Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
NVIDIA (NVDA)
4.7723 of 5 stars
$97.85+3.8%0.04%38.29Moderate Buy$169.89
Broadcom (AVGO)
4.9718 of 5 stars
$154.27+5.5%1.53%125.00Moderate Buy$231.48
Compare These Stocks  Add These Stocks to My Watchlist 

Remove Ads

Featured Articles and Offers

Google’s $32B Move: 3 Cybersecurity Stocks to Watch

Google’s $32B Move: 3 Cybersecurity Stocks to Watch

Cybersecurity spending is skyrocketing – and these 3 stocks are ready to take off! Watch top 3 cybersecurity stocks with massive upside as demand surges.

Related Videos

3 AI Stocks to Watch After NVIDIA’s Dip
7 Inflation-Proof Stocks to Protect Your Portfolio
3 AI Bargain Stocks to BUY NOW After the DeepSeek Crash

Stock Lists

All Stock Lists

Investing Tools

Calendars and Tools

Search Headlines

Remove Ads