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Broadcom Up 24% in a Month: How to Play AVGO Ahead of Split?
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Broadcom (AVGO - Free Report) shares have gained 24.5% in a month, outperforming the S&P 500 index’s return of 3.63%. It has garnered a lot of investors' attention in recent times thanks to its growing prowess in the AI space, as well as a 10-for-1 stock split.
AVGO is benefiting from the growing demand for AI infrastructure and the strong deployment of generative AI. Broadcom’s solutions are suitable for addressing the needs of an increasing AI workload and the growing need for fast networking in data centers.
In the second quarter of fiscal 2024, AVGO doubled shipments of PCI Express switches and NICs in the AI backend fabric. AI sales surged an astounding 280% year over year and are now expected to be more than $11 billion for fiscal 2024.
AVGO Stock Rides on Strong Portfolio
Broadcom’s portfolio offerings include foundational technologies and advanced packaging capabilities aimed at building the highest performance, lowest power custom AI accelerators is expanding its footprint in the next-gen AI infrastructure domain.
Its Bailly is the world’s premier 51.2 terabits per second (Tbps) co-packaged optics Ethernet switch. This product integrates cutting-edge silicon photonics technology with Broadcom’s renowned StrataXGS Tomahawk 5 switch chip, setting a new standard for efficiency and performance in AI infrastructure. Tomahawk 5 provides a major performance boost for AI and machine learning infrastructure.
Its VCSEL, EML and CW laser technologies enable high-speed interconnects for front-end and back-end networks of large-scale generative AI compute clusters. AVGO offers the industry’s first end-to-end PCIe connectivity portfolio with its new PCIe Gen5/Gen6 retimers in combination with PEX series switches.
AVGO’s Sian BCM85822 800G PAM-4 DSP PHY solution is suitable for AI workloads at scale. The high-performance Jericho3-AI fabric for AI networks also helps enterprises efficiently handle ever-increasing AI workload demands.
Broadcom’s latest 400G PCIe Gen 5.0 Ethernet adapters are poised to transform the data center landscape by addressing the escalating connectivity demands of AI ecosystems.
Its new adapters are the industry’s first to utilize 5 nm process technology, leading to superior power and thermal efficiency. This advancement allows the adapters to drive passive copper cables up to five meters or ultra-low power linear pluggable optics transceivers. Paired with Broadcom’s high-radix Ethernet switches, these adapters significantly boost rack density using standard air-cooling technology.
The demand for higher data transfer speeds in AI networks is rapidly increasing. Broadcom’s third-generation RoCE pipeline, low-latency congestion control, and innovative telemetry features make these adapters ideal for high-bandwidth, high-stress environments typical of AI infrastructure. The new portfolio caters to the massive data processing requirements of training large language models, supporting larger server clusters with scalable, high-bandwidth, low-latency connectivity.
Expanding Clientele Aids Prospect
Broadcom’s expanding clientele, which includes the likes of Alphabet (GOOGL - Free Report) and Meta Platforms (META - Free Report) , is noteworthy. Its strong partner base has been a key catalyst.
Alphabet is one of the large customers of Broadcom’s application-specific integrated chips (ASICs). These chips are designed to support AI and machine learning and make these tasks more efficient. Meta Platforms has also become an important customer as it is using AVGO’s ASICs to develop Metaverse hardware.
In the second quarter of fiscal 2024, sales of the PAM-5 and Jericho 3, which Broadcom deployed successfully in close collaboration with partners like Arista Networks, Dell, Juniper and Supermicro, doubled year over year.
Conclusion
A strong portfolio, along with an expanding partner base, surely reflects solid top-line growth potential over the long run.
For fiscal 2024, AVGO expects revenues of $51 billion (up from the previous guidance of $50 million) and adjusted EBITDA margin of 61% (up from 60%). The rise reflects the growing dominance of AVGO in the AI infrastructure market.
The Zacks Consensus Estimate for fiscal 2024 is pegged at $51.26 billion, suggesting growth of 43.12% year over year. The consensus estimate for earnings is pegged at $47.39 per share, up 0.7% over the past 30 days, indicating 12.17% year-over-year growth.
However, sluggish broadband and server storage end-markets are expected to hurt prospects in the near term. Broadcom’s valuation looks stretched at the current level, as reflected by the Value Score of F.
Image: Bigstock
Broadcom Up 24% in a Month: How to Play AVGO Ahead of Split?
Broadcom (AVGO - Free Report) shares have gained 24.5% in a month, outperforming the S&P 500 index’s return of 3.63%. It has garnered a lot of investors' attention in recent times thanks to its growing prowess in the AI space, as well as a 10-for-1 stock split.
AVGO is benefiting from the growing demand for AI infrastructure and the strong deployment of generative AI. Broadcom’s solutions are suitable for addressing the needs of an increasing AI workload and the growing need for fast networking in data centers.
In the second quarter of fiscal 2024, AVGO doubled shipments of PCI Express switches and NICs in the AI backend fabric. AI sales surged an astounding 280% year over year and are now expected to be more than $11 billion for fiscal 2024.
AVGO Stock Rides on Strong Portfolio
Broadcom’s portfolio offerings include foundational technologies and advanced packaging capabilities aimed at building the highest performance, lowest power custom AI accelerators is expanding its footprint in the next-gen AI infrastructure domain.
Its Bailly is the world’s premier 51.2 terabits per second (Tbps) co-packaged optics Ethernet switch. This product integrates cutting-edge silicon photonics technology with Broadcom’s renowned StrataXGS Tomahawk 5 switch chip, setting a new standard for efficiency and performance in AI infrastructure. Tomahawk 5 provides a major performance boost for AI and machine learning infrastructure.
Its VCSEL, EML and CW laser technologies enable high-speed interconnects for front-end and back-end networks of large-scale generative AI compute clusters. AVGO offers the industry’s first end-to-end PCIe connectivity portfolio with its new PCIe Gen5/Gen6 retimers in combination with PEX series switches.
AVGO’s Sian BCM85822 800G PAM-4 DSP PHY solution is suitable for AI workloads at scale. The high-performance Jericho3-AI fabric for AI networks also helps enterprises efficiently handle ever-increasing AI workload demands.
Broadcom’s latest 400G PCIe Gen 5.0 Ethernet adapters are poised to transform the data center landscape by addressing the escalating connectivity demands of AI ecosystems.
Its new adapters are the industry’s first to utilize 5 nm process technology, leading to superior power and thermal efficiency. This advancement allows the adapters to drive passive copper cables up to five meters or ultra-low power linear pluggable optics transceivers. Paired with Broadcom’s high-radix Ethernet switches, these adapters significantly boost rack density using standard air-cooling technology.
The demand for higher data transfer speeds in AI networks is rapidly increasing. Broadcom’s third-generation RoCE pipeline, low-latency congestion control, and innovative telemetry features make these adapters ideal for high-bandwidth, high-stress environments typical of AI infrastructure. The new portfolio caters to the massive data processing requirements of training large language models, supporting larger server clusters with scalable, high-bandwidth, low-latency connectivity.
Expanding Clientele Aids Prospect
Broadcom’s expanding clientele, which includes the likes of Alphabet (GOOGL - Free Report) and Meta Platforms (META - Free Report) , is noteworthy. Its strong partner base has been a key catalyst.
Alphabet is one of the large customers of Broadcom’s application-specific integrated chips (ASICs). These chips are designed to support AI and machine learning and make these tasks more efficient. Meta Platforms has also become an important customer as it is using AVGO’s ASICs to develop Metaverse hardware.
In the second quarter of fiscal 2024, sales of the PAM-5 and Jericho 3, which Broadcom deployed successfully in close collaboration with partners like Arista Networks, Dell, Juniper and Supermicro, doubled year over year.
Conclusion
A strong portfolio, along with an expanding partner base, surely reflects solid top-line growth potential over the long run.
For fiscal 2024, AVGO expects revenues of $51 billion (up from the previous guidance of $50 million) and adjusted EBITDA margin of 61% (up from 60%). The rise reflects the growing dominance of AVGO in the AI infrastructure market.
The Zacks Consensus Estimate for fiscal 2024 is pegged at $51.26 billion, suggesting growth of 43.12% year over year. The consensus estimate for earnings is pegged at $47.39 per share, up 0.7% over the past 30 days, indicating 12.17% year-over-year growth.
However, sluggish broadband and server storage end-markets are expected to hurt prospects in the near term. Broadcom’s valuation looks stretched at the current level, as reflected by the Value Score of F.
Broadcom currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Hence, it would be prudent for investors to wait for a better entry time.