Broadcom announces 10-for-1 stock split, focus on strong AI and software performance

From NASDAQ MarketSite: 2024-06-17 04:45:00

Tech giant Broadcom (NASDAQ: AVGO) announced a 10-for-1 stock split effective July 12, with shares rising over 12% to $1,700 post-earnings. The split won’t change the company’s $780 billion value. VMware, contributing 42% of revenue, grows post-acquisition. Broadcom accelerated VMware’s revenue growth by 29% in Q2 2024 and aims for a $4 billion quarterly revenue.

Broadcom CEO Hock Tan sees VMware’s revenue hitting $4 billion soon, with operating expenses targeted to drop. VMware’s gross margin was 81.2% in July 2023, with potential for $8.2 billion in operating profit post-acquisition. Broadcom’s AI products, such as networking and custom AI accelerators, continue to excel, representing 53% of semiconductor revenue.

Broadcom’s stock may not be as cheap as before AI growth, but strong performance from its AI and software segments offset lagging segments such as mobile chips and storage connectivity hardware. AI revenue is booming, with non-AI segments expected to recover soon. The company’s profits are likely to surge, making the stock more affordable based on future earnings.

According to the Motley Fool Stock Advisor team, Broadcom is not among their top 10 stock picks. While Broadcomm shows strong potential, investors should consider other opportunities. The Motley Fool Stock Advisor service offers guidance on building a successful portfolio, regular updates from analysts, and two new stock picks monthly. Make informed investment decisions based on comprehensive research and analysis from trusted experts.



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