Broadcom’s shares surged by approximately 12% on Thursday following an impressive second fiscal quarter earnings report that exceeded analysts’ expectations. The company, under the leadership of CEO Hock Tan, seems to be capitalizing on the current artificial intelligence frenzy.
Hock Tan, Chief Executive Officer of Broadcom
Lucas Jackson | Reuters
Surpassing the LSEG consensus estimate of $10.84 per share, Broadcom reported earnings per share of $10.96. The company’s revenue stood at $12.49 billion, comfortably beating the projected $12.03 billion.
Broadcom has predicted sales of around $51 billion for its fiscal 2024 year, a figure higher than its prior outlook and slightly above the consensus estimate of $50.42 billion. Analysts are optimistic about Broadcom’s future, considering the uptick in AI investments.
“In tandem with Nvidia, we regard Broadcom as a crucial element in the continuous expansion of AI infrastructure. Consequently, we maintain our Buy recommendation for the stock, foreseeing an 8% potential increase (in contrast to AVGO’s after-hour price of $1,713) to our revised 12-month target of $1,850 (up from $1,550 previously),” noted Goldman Sachs analysts in a communication to investors on Thursday.
Bank of America analysts echoed similar sentiments, affirming a buy rating for Broadcom and identifying it as a prime choice in the AI sector due to its advancements in tailor-made AI chips and Ethernet networking. They further highlighted Broadcom’s ability to cross-sell VMware to corporate clients implementing AI solutions.
“We have set FY24E sales at $51.5bn, above the guidance, indicating sustained growth in AI. Additionally, we have raised FY25/FY26E sales growth projections to 16%/10% year-over-year from the previous estimates of 14%/8%,” as per the Bank of America analysts.
On Wednesday, Broadcom announced plans for a 10-for-1 stock split. Trading post-split adjusted shares is scheduled to commence on July 15.
— Contribution to this report by Michael Bloom from good
