June 8, 2024

As Broadcom Inc. (NASDAQ: AVGO) prepares to report its earnings on June 12, 2024, after the market closes, investors and analysts are keenly anticipating the company’s performance and guidance. Broadcom has been a strong performer, driven by its semiconductor and infrastructure software segments. This preview will delve into the technical and fundamental analysis, as well as recent news, to provide insights into what can be expected from AVGO’s upcoming earnings report.

Recent Stock Performance and Technical Analysis

Broadcom’s stock has experienced notable volatility in recent months. Here are some key metrics from the recent trading sessions:

• Current Price: $1406.64
• 52-Week High: $1445.4
• 52-Week Low: $795.09
• Price Change (Last Trading Day): +$5.37 (+0.38%)
• Volume: 1,776,516

The stock has been trading above its 50-day moving average of $1334.67 and its 200-day moving average of $1116.17, indicating a bullish trend. The Relative Strength Index (RSI) also suggests that the stock is not in overbought territory, providing room for further upside.

The historical data reveals the following price movements:

• June 5, 2024: Closed at $1413.09, up 4.98% from the previous close.
• May 29, 2024: Closed at $1390.67, down 0.60% from the previous close.

The technical indicators suggest that Broadcom’s stock is currently stable with a potential for upward movement, supported by positive momentum in the broader tech sector.

Fundamental Analysis and Earnings Expectations

Broadcom’s past earnings have shown consistent growth, driven by strong demand in semiconductor solutions and infrastructure software. Here are some key financial metrics and consensus estimates:

• Consensus Earnings Per Share (EPS) Estimate: $10.79
• Consensus Revenue Estimate: $12.03 billion

In Q1 2024, Broadcom reported an EPS of $10.99, beating the estimate of $10.37, with a revenue of $11.96 billion, surpassing the estimate of $11.79 billion. This strong performance was attributed to robust demand for its networking and storage solutions, as well as stable revenue from its infrastructure software segment.

Analyst Price Targets and Consensus

Analysts have set the following price targets for AVGO:

• Target High: $1850
• Target Low: $580
• Target Consensus: $1125.58
• Target Median: $1050

These price targets indicate a wide range of expectations, reflecting the potential risks and rewards associated with the stock. The consensus target of $1125.58 suggests a moderate downside from the current price, but the high target of $1850 indicates significant potential for upside if the company continues to exceed expectations.

Recent News and Developments

One of the major developments for Broadcom is the acquisition of VMware, which was completed on November 22, 2023. This acquisition is expected to significantly boost Broadcom’s infrastructure software revenue, with a projected contribution of $12 billion in fiscal 2024. The integration of VMware is likely to drive synergies and enhance Broadcom’s position in the cloud and data center markets.

Additionally, Broadcom has been focusing on its semiconductor segment, particularly in the areas of networking and AI accelerators. The demand for AI-driven solutions has been a key growth driver, with revenue from generative AI expected to represent more than 25% of semiconductor revenue in fiscal 2024.

Conclusion and Outlook

Broadcom’s upcoming earnings report is expected to reflect continued strength in its core businesses, supported by robust demand in both semiconductor and software segments. The integration of VMware and the company’s focus on AI solutions are likely to drive future growth and profitability.

While the stock has already seen significant gains, the potential for further upside remains, especially if Broadcom can continue to deliver strong earnings and positive guidance. Investors should keep an eye on the company’s revenue growth, EPS performance, and any updates on the VMware integration during the earnings call.

Overall, Broadcom remains a compelling investment in the tech sector, with strong fundamentals and promising growth prospects.