Broadcom completes 10-for-1 stock split, strong market presence in networking chips and custom AI accelerators.

From NASDAQ.: 2024-12-18 04:05:00

The Nasdaq Composite has surged 34% year to date, with a history suggesting momentum could continue into 2025. After a 30% gain in a year, the Nasdaq typically adds 19% the following year. Broadcom recently completed a 10-for-1 stock split, with strong market presence in networking chips and custom AI accelerators.

Broadcom’s business segments include semiconductor solutions and infrastructure software, with a dominant market share in Ethernet networking and custom AI chips. The company’s legacy businesses are expected to grow slowly, but high-growth industries like data center networking chips and custom AI accelerators offer significant potential for growth.

Broadcom’s fourth-quarter report showed a 51% revenue increase to $14 billion, with custom AI chip sales expected to reach $60-90 billion by fiscal 2027. Analysts anticipate adjusted earnings to grow at 21% annually through fiscal 2027, making the current valuation of 51 times adjusted earnings seem expensive but still worth considering for patient investors.

Forward earnings estimates for Broadcom do not include potential customers like Apple and OpenAI, suggesting earnings may increase more rapidly than anticipated. The Motley Fool Stock Advisor team identified Broadcom as a strong investment choice, highlighting the potential for significant returns in the coming years. Consider investing for long-term growth potential.



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