Spiking over +15% in early morning trading, Broadcom’s AVGO stock hit all-time highs today as AI helped the semiconductor titan post stellar growth for its fiscal second quarter.
After reporting impressive Q2 results Wednesday evening, let’s see if now is a good time to buy Broadcom’s stock.
Q2 Review
Broadcom’s Q2 sales of $12.48 billion soared 43% from $8.73 billion in the comparative quarter, beating estimates of $12.04 billion by 4%. The top line expansion was attributed to AI revenue of $3.1 billion which stretched 280% from the prior year quarter and helped fuel today’s rally.
On the bottom line, Q2 EPS of $10.96 beat expectations of $10.79 a share by 1% and increased 6% from $10.32 per share a year ago.
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Elevated Guidance
Unlike Nvidia NVDA, Broadcom hasn’t centered its semiconductor offerings around artificial intelligence but expects strength in AI to continue. To that point, Broadcom’s advanced networking chips have played a crucial role in handling vast amounts of data used by AI applications including OpenAI’s ChatGPT.
This led to Broadcom raising its full-year revenue guidance for fiscal 2024 from $50 billion to $51 billion which came in above the current Zacks Consensus of $50.54 billion or 41% growth. (Current Year below). Even better, Broadcom’s total sales are expected to increase another 13% in FY25 based on Zacks estiimates.
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Stock Split
Following Nvidia’s footsteps, Broadcom also announced a 10-1 stock split to make ownership more accessible to retail investors and employees. The split will commence on Monday, July 15, with shareholders on record by Thursday, July 11 receiving an additional 9 shares after the close of markets on Friday, July 12.
Currently trading over $1,600 a share, Broadcom’s stock has spiked +50% year to date which has impressively topped the broader indexes although this has trailed Nvidia’s +159%.
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Bottom Line
Broadcom’s stock currently sports a Zacks Rank #2 (Buy) as AI is starting to enhance the company's attractive outlook and earnings estimate revisions are likely to trend even higher following the tech giant’s strong Q2 results.
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