Broadcom (AVGO) AI Stock Analysis

• Market Cap: $724.15B
• Dividend Yield: 1.53%
• Average Volume (3M): 33.84M
• Price to Earnings (P/E): 74.3
• Beta (1Y): 2.29
• Revenue Growth: 40.30%
• EPS Growth: -22.79%
• Country: US
• Employees: 37,000
• Sector: Technology
• Sector Strength: 40
• Industry: Semiconductors
• EPS (TTM): 2.07
• Shares Outstanding: 4,701,948,700
• 10 Day Avg. Volume: 31,196,582
• 30 Day Avg. Volume: 33,838,806
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): 16.53
• Price to Cash Flow (P/CF): 36.90
• P/FCF Ratio: 32.70
• 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: $250.90
• Price Target Upside: 71.51% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 25

Broadcom demonstrates robust financial performance and promising growth in AI and infrastructure software, which are key strengths. However, the high P/E ratio suggests the stock is expensive, reflecting high expectations. Technical analysis shows mixed signals, and challenges in non-AI segments present risks. Overall, strong financials and growth prospects contribute positively, while valuation and technical indicators warrant caution.

Positive Factors

AI Sector Growth

Broadcom has expanded its XPU/ASIC customer base from three to seven, highlighting its growth in the AI sector.

VMware Acquisition

The VMware acquisition will continue to provide growth, margins, and cash flow, with software growth at 47% in 1Q25.

Negative Factors

AI Revenue Slowdown

AI revenue comps likely slow this year, highlighting a slowdown.

Market Risks

AI strength should offset risks from Bytedance and Wi-Fi share loss.

Broadcom Business Overview & Revenue Model

Company Description

Broadcom Inc. (AVGO) is a global technology leader that designs, develops, and supplies a broad range of semiconductor and infrastructure software solutions. The company's products serve various sectors, including data centers, networking, software, broadband, wireless, storage, and industrial markets. Broadcom's core products include data center networking solutions, enterprise software, mainframe and cybersecurity solutions, smartphone components, and other semiconductor devices.

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's financial health is robust, driven by strong revenue growth, high profitability margins, and efficient cash management. The company's strategic investments and operational efficiencies are evident, although there are opportunities to enhance asset utilization and reduce leverage for even more stability. Overall, Broadcom is well-positioned within the semiconductor industry, with sound financials supporting its growth trajectory.

Income Statement

Broadcom has demonstrated strong financial performance with a substantial Gross Profit Margin of 63.3% and a robust Net Profit Margin of 18.5% for TTM (Trailing-Twelve-Months). Revenue Growth Rate is impressive at 5.7% year-over-year, reflecting a positive trajectory in sales. The EBIT Margin stands at 33.0%, and the EBITDA Margin at 46.7%, showcasing excellent operational efficiency. The consistent revenue and profit growth underlines solid market positioning.

Balance Sheet

The company's balance sheet reflects a moderate Debt-to-Equity Ratio of 0.95, indicating a balanced approach to leveraging debt. Return on Equity is robust at 14.4%, suggesting effective utilization of equity capital. However, the Equity Ratio of 42.2% signifies a relatively high level of liabilities compared to assets. The stability is notable, but there's room to optimize asset utilization and decrease leverage.

Cash Flow

Broadcom's cash flow situation is strong, with a Free Cash Flow to Net Income Ratio of 2.06, indicating high cash generation relative to reported profits. The Operating Cash Flow to Net Income Ratio is 2.11, demonstrating reliable cash conversion from operations. Free Cash Flow Growth Rate over the past year is notable at 6.8%, showcasing efficient capital expenditure and cash management strategies.

Breakdown
TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
54.53B	51.57B	35.82B	33.20B	27.45B	23.89B
	Gross Profit
34.51B	32.51B	24.69B	22.09B	16.84B	13.52B
	EBIT
17.98B	13.46B	16.21B	14.22B	8.52B	4.01B
	EBITDA
25.47B	23.72B	20.55B	19.16B	14.69B	11.13B
	Net Income Common Stockholders
10.07B	5.89B	14.08B	11.49B	6.74B	2.96B
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
561.00M	9.35B	14.19B	12.42B	12.16B	7.62B
	Total Assets
2.16B	165.65B	72.86B	73.25B	75.57B	75.93B
	Total Debt
236.00M	67.57B	39.23B	39.52B	39.73B	41.06B
	Net Debt
-325.00M	58.22B	25.04B	27.10B	27.57B	33.44B
	Total Liabilities
652.00M	97.97B	48.87B	50.54B	50.58B	52.03B
	Stockholders Equity
1.50B	67.68B	23.99B	22.71B	24.99B	23.90B
Cash Flow		Free Cash Flow
20.73B	19.41B	17.63B	16.31B	13.32B	11.60B
	Operating Cash Flow
21.26B	19.96B	18.09B	16.74B	13.76B	12.06B
	Investing Cash Flow
2.23B	-23.07B	-689.00M	-667.00M	-245.00M	-11.11B
	Financing Cash Flow
-26.05B	-1.73B	-15.62B	-15.82B	-8.97B	1.61B

Broadcom Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 146.29
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• 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 146.29 is below the 20-day moving average (MA) of 181.01, below the 50-day MA of 201.32, and below the 200-day MA of 182.77, indicating a bearish trend. The MACD of -9.55 indicates Positive momentum. The RSI at 32.67 is Neutral, neither overbought nor oversold. The STOCH value of 16.11 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	$154.20B	14.90	41.96%	2.44%	12.13%	36.17%
AVGO	75 Outperform	$724.15B	74.28	14.85%	1.53%	40.30%	-22.79%
NVDA	75 Outperform	$2.48T	34.65	119.18%	0.04%	114.20%	146.26%
AMD	72 Outperform	$152.00B	85.49	2.89%	―	13.69%	91.75%
TXN	65 Neutral	$149.41B	31.60	28.25%	3.51%	-10.72%	-26.60%
Sector *	57 Neutral	$18.57B	9.42	-13.42%	2.72%	5.01%	-23.43%
INTC	52 Neutral	$97.81B	―	-18.31%	2.23%	-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.