Broadcom stock (AVGO) is trading at a record high as investors anticipate its forthcoming earnings report. Moreover, the company's market capitalization has surpassed $667 billion, having increased by over 26% this year and over 410% over the past five years.
Broadcom Stock (AVGO) Key Strengths
Broadcom has achieved the status of the 11th largest company in the world by means of both organic growth and acquisitions. This includes Brocade in 2017, CA Technologies in 2018, Symantec in 2019, and VMware in 2023.
As a result of these acquisitions, Broadcom's revenue has considerably increased from $22.59 billion in 2019 to over $35.8 billion in 2023. Nevertheless, the company's debt has experienced a significant increase, from more than $30 billion in 2019 to more than $73.42 billion in the most recent quarter.
Broadcom has expanded its infrastructure software business to encompass areas such as cybersecurity, cloud infrastructure, and storage area networking as a result of the acquisitions. As a result, its free cash flow increased from more than $9.2 billion in 2019 to more than $17.6 billion in 2023.
Broadcom Earnings Reports: What Might Happen?
The earnings report scheduled for June 12th will catalyze AVGO's stock price. According to analysts, the company's revenue is expected to increase to $12 billion from $8.7 billion in the same quarter of 2023 and $11.96 billion in the previous quarter.
According to analysts, the VMWare acquisition and the ongoing AI trend are expected to drive Broadcom's revenue to $50.41 billion for the full year, a 40% increase from 2023.
However, despite its success, Broadcom is considered exceedingly expensive. Its forward P/E ratio is 73, higher than the sector median of 29, and its forward EV/EBITDA is 23, lower than the average of 14.
Broadcom's collaboration with Meta (META) includes co-designing Meta's first and second-generation AI training processors, which would be a crucial factor to look at. Broadcom is anticipated to increase the production of Meta's 3rd-gen AI chip (MTIA 3) in late 2024 and into 2025.
