Broadcom AVGO shares have ripped greater than +30% for the reason that chip big posted favorable outcomes for its fiscal fourth quarter final Thursday. Setting a bullish tone, Broadcom has seen excessive demand for its customized synthetic intelligence chips which have been essential to powering AI knowledge facilities.
Cracking a $1 trillion market cap for the primary time, buyers could also be questioning if the rally in Broadcom inventory can proceed.
Picture Supply: Zacks Funding Analysis
Broadcom’s This fall Outcomes
Due to its AI growth, Broadcom’s This fall gross sales elevated 51% yr over yr to $14.05 billion though this barely missed Zacks estimates of $14.06 billion. On the underside line, This fall adjusted internet earnings got here in at $6.96 billion or $1.42 per share. This edged the Zacks EPS Consensus of $1.39 and rose 28% from $1.11 a share within the comparative quarter.
General, Broadcom’s prime line expanded 44% in fiscal 2024 to a document $51.57 billion as AI income greater than tripled to $12.2 billion. Annual EPS elevated 26% to $4.87 versus $3.86 per share in FY23.
Picture Supply: Zacks Funding Analysis
Optimistic Steering & Outlook
As a key chip provider to Apple AAPL, Broadcom CEO Hock Tan acknowledged the corporate has additionally added two main hyper-scale knowledge middle prospects. Attributed to such, Broadcom expects its fiscal first quarter income to extend 22% to $14.6 billion with the present Zacks Consensus at $14.55 billion (Present Qtr Beneath).
Moreover, the chip big tasks AI income to soar 65% throughout Q1 to $3.8 billion. Primarily based on Zacks estimates, Broadcom’s complete gross sales are anticipated to develop 18% in FY25 and are forecasted to extend one other 8% in FY26 to $66.07 billion. Optimistically, Broadcom thinks its AI enterprise might herald $60-$90 billion in annual gross sales by 2027.
Picture Supply: Zacks Funding Analysis
AVGO Efficiency & Valuation
Beginning to problem Nvidia’s NVDA market dominance, Broadcom inventory has soared over +100% this yr to vastly outperform the broader indexes.
Picture Supply: Zacks Funding Analysis
Buying and selling round $241 a share, AVGO is at a 36.7X ahead earnings a number of. Whereas it is a premium to the S&P 500’s 25.7X, Broadcom inventory trades beneath Nvidia’s 45.6X and is on par with their Zacks Electronics-Semiconductors Business common.
Though Broadcom is at a reasonably affordable P/E a number of, AVGO does commerce at premiums to the broader market by way of different key valuation metrics as effectively, like a lot of its huge tech friends.
Picture Supply: Zacks Funding Analysis
Backside Line
Following such an in depth rally, Broadcom inventory lands a Zacks Rank #3 (Maintain). Due to excessive demand for its AI chips, Broadcom’s gross sales outlook has definitely change into extra interesting to long-term buyers however extra upside from present ranges will doubtless depend upon what’s hopefully a pattern of optimistic earnings estimate revisions within the coming weeks.
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Apple Inc. (AAPL) : Free Stock Analysis Report
NVIDIA Corporation (NVDA) : Free Stock Analysis Report
Broadcom Inc. (AVGO) : Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the writer and don’t essentially mirror these of Nasdaq, Inc.
