Broadcom exceeded revenue and profit estimates, but stock fell due to profit-taking. Wall Street remains bullish on the company, whose valuation is now more attractive after the sell-off. The rise of AI is reshaping the tech landscape, with Broadcom benefiting from the shift towards energy-efficient AI solutions.
Broadcom reported record revenue of $18.01 billion for Q4, up 28% YoY, beating analysts’ estimates. AI-centric revenue surged 74%, driving a 37% increase in adjusted EPS. Despite the strong earnings, profit-taking caused the stock to drop, prompting analysts to raise price targets well above $500 per share.
Broadcom’s AI business is booming, with CEO Hock Tan noting unprecedented demand and major orders from AI start-ups. The stock’s recent price drop presents a buying opportunity, with a PEG ratio of 0.39 signaling undervaluation. Analysts overwhelmingly rate Broadcom as a buy or strong buy, with significant upside potential.
HSBC analyst maintains a $535 price target, citing the potential for Broadcom’s ASICs in data centers. The stock’s valuation, selling at 28 times next year’s earnings, makes it an appealing investment. Investors should consider the company’s momentum and growth potential in the AI market when evaluating Broadcom. 1. The stock market saw a significant drop today, with the Dow Jones Industrial Average falling by over 500 points. This drop was attributed to concerns over rising inflation and interest rates, leading to investor uncertainty and selling off of stocks.
2. The Federal Reserve announced a 0.25% increase in interest rates, bringing the federal funds rate to a range of 2.25% to 2.50%. This decision was made in response to strong economic growth and low unemployment rates, but raised fears of a potential economic slowdown.
3. The latest job report revealed that the unemployment rate remained steady at 3.7% in November, with the economy adding 155,000 new jobs. While this was slightly below expectations, it still reflects a strong labor market and continued economic growth.
4. Retail sales for the holiday season are projected to increase by 4.3% this year, reaching an estimated total of $717.45 billion. This growth is driven by strong consumer confidence and increased online shopping, with e-commerce sales expected to make up a significant portion of the total.
Read more at Yahoo Finance: Broadcom’s AI Accelerator Business Is Booming, But the Stock Is Falling. Could This Be the Most Underrated AI Play Right Now?