Broadcom's 10-for-1 Stock Split: A Potential Game-Changer in the Tech Sector

Is Broadcom a Better Stock-Split Buy Than Nvidia? Wall Street Thinks So.

It's a leader in technology that powers artificial intelligence (AI) models. Its revenue is soaring. Its shares have skyrocketed. It announced a 10-for-1 stock split this year. Which stock am I talking about? There are two correct answers: Nvidia (NASDAQ: NVDA) and Broadcom (NASDAQ: AVGO). However, Nvidia has been the bigger star of the two. But could that change? Is Broadcom a better stock-split buy than Nvidia? Wall Street thinks so. What analysts think about Broadcom and Nvidia Nvidia has been a Wall Street darling for several years. It's fair to say now, though, that there's no longer a consensus about the high-flying AI stock. Three months ago, 54 of the 58 analysts surveyed by LSEG rated Nvidia as a "buy" or a "strong buy." However, of the 38 analysts surveyed so far in July, only 21 still put the stock in one of those two categories. Fifteen analysts now rate Nvidia as a "hold" with two recommending investors sell the stock. The average 12-month price target for Nvidia compiled by LSEG from 48 analysts is a little below the current share price. The most pessimistic analyst (admittedly an outlier) thinks the stock could plunge more than 60%. It's a much better story for Broadcom. LSEG surveyed 29 analysts this month to get their take on the stock; 27 of them rated it as a "buy" or a "strong buy." The remaining two analysts rate Broadcom as a "hold." Granted, Wall Street doesn't think Broadcom will deliver the sizzling gains over the next 12 months that it has over the past year. However, the average price target for the stock reflects an upside potential of nearly 10%. Why Broadcom is viewed more favorably What changed to make Wall Street more bullish about Broadcom than Nvidia? The simple answer is that Nvidia has become a victim of its own success. The stock is up more than 160% so far in 2024. This impressive performance comes on the heels of a gain of nearly 240% last year. Many analysts think Nvidia's sales will continue to grow robustly, but this growth is already baked into the share price. NewStreet Research analyst Pierre Ferragu even downgraded Nvidia stock recently from a "buy" to "neutral." He wrote to investors that he sees "limited further upside" for Nvidia after its tremendous returns over the last 18 months or so. Meanwhile, Broadcom's valuation remains relatively attractive despite its strong gains. The stock trades at 29 times forward earnings, well below Nvidia's forward earnings multiple of 49. Is Wall Street right? I agree with analysts in some ways. Although Broadcom's valuation isn't exactly cheap, the company doesn't have to generate the dizzying level of growth that Nvidia must deliver to justify its premium price. You could argue that Broadcom is a lower-risk pick. It wouldn't surprise me at all if Broadcom hits the average analysts' price target over the next 12 months (and probably sooner). The company should enjoy solid growth over the next few quarters from its VMware acquisition and demand for its AI accelerators. However, I'm not completely on the same page as Wall Street's views about Nvidia. I've been guilty in the past of underestimating the chipmaker's growth potential. My hunch is that Nvidia's launch of its new Blackwell platform in the coming months could go better than most analysts expect. If so, look for multiple rounds of upward price target revisions in the not-too-distant future. The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now... and Broadcom wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $791,929!* Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*. Keith Speights has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia. The Motley Fool recommends Broadcom. The Motley Fool has a disclosure policy. The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Will Broadcom Stock Soar After Its 10-for-1 Stock Split? Here's What History Shows.

You'll see what appears to be a huge decline in Broadcom's (NASDAQ: AVGO) share price when the stock market opens for trading on Monday, but don't be alarmed. The giant semiconductor maker conducted a 10-for-1 stock split following the market close on July 12. The "decline" for Broadcom will be the equivalent of dividing one piece of pizza into 10 slices. The slices are smaller, but there's just as much pizza to enjoy. With pizza, though, there's no chance that the smaller slices will miraculously grow larger. It just might be a different story with Broadcom. Will the stock soar after its 10-for-1 stock split? Here's what history has shown. Broadcom's murky stock-split history Has Broadcom split its shares in the past? Yes and no. It depends on which Broadcom we're talking about. Confused? Allow me to explain. Broadcom Corporation was founded in 1991. The company conducted an initial public offering in April 1998, listing its shares on the Nasdaq stock exchange under the ticker "BRCM." Less than a year later, Broadcom conducted a 2-for-1 stock split on Feb. 18, 1999. It did another 2-for-1 stock split on Feb. 14, 2000. Then Broadcom split its shares 3-for-2 on Feb. 22, 2006. Avago acquired Broadcom in 2016. The company retained its stock ticker of "AVGO" but assumed the Broadcom name with the transaction. Avago had never conducted a stock split. Until now, the "new" Broadcom had not split its stock, either. How did the "old" Broadcom stock perform after its three stock splits? There's more murkiness. Immediately following the 2-for-1 split in February 1999, Broadcom's shares rose modestly, then fell. However, the stock skyrocketed throughout the rest of the year with the dot-com boom in full swing. Those huge gains led to the company's second stock split in February 2000. The stock again moved higher after the split, and then declined. By the end of the year, though, Broadcom's share price was significantly lower as the dot-com bubble burst. It was a similar story with Broadcom's 3-for-2 split in February 2006. Shares rose for a few days after the split, then gave up the gains. By the end of 2006, Broadcom stock had fallen by nearly 30%. A broader view Is there any reason for investors to expect better results with Broadcom's recent 10-for-1 stock split? Actually, yes. But you need to take a broader view by looking at the historical performance of more stocks conducting stock splits. Fortunately, Bank of America's Research Investment Committee has already performed a detailed analysis of all stock splits dating back to 1980. BofA's team found that stocks rose by an average of 25.4% in the 12 months after announcing a stock split. By comparison, the S&P 500 rose by an average of only 11.9% during these periods. Broadcom stock has risen roughly 17% since announcing its stock split on June 12, 2024. It still has some room to run to reach the historical average gain. However, there's a catch to consider. Bank of America's committee found that stocks conducting splits since 2010 have delivered lower average gains of 18.3% in the 12 months following the announcement of their stock splits. This more recent history doesn't give investors much to hang their hats on with Broadcom. Better growth drivers for Broadcom I think the smartest approach for investors is to pay no attention to Broadcom's stock split. Instead, focus on the company's long-term prospects. The good news is that there are better growth drivers for the chipmaker. Broadcom's acquisition of VMware is already contributing significantly to its revenue growth. Demand for the company's artificial intelligence (AI) accelerators is also surging. I expect both will continue to push Broadcom's revenue and earnings higher. The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now... and Broadcom wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $780,654!* Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*. Bank of America is an advertising partner of The Ascent, a Motley Fool company. Keith Speights has positions in Bank of America. The Motley Fool has positions in and recommends Bank of America. The Motley Fool recommends Broadcom and Nasdaq. The Motley Fool has a disclosure policy. The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Is Broadcom a Better Stock-Split Buy Than Nvidia? Wall Street Thinks So. | The Motley Fool

Nvidia used to be Wall Street's darling. Now, many analysts like Broadcom more. It's a leader in technology that powers artificial intelligence (AI) models. Its revenue is soaring. Its shares have skyrocketed. It announced a 10-for-1 stock split this year. Which stock am I talking about? There are two correct answers: Nvidia (NVDA 1.44%) and Broadcom (AVGO -0.31%). However, Nvidia has been the bigger star of the two. But could that change? Is Broadcom a better stock-split buy than Nvidia? Wall Street thinks so. Nvidia has been a Wall Street darling for several years. It's fair to say now, though, that there's no longer a consensus about the high-flying AI stock. Three months ago, 54 of the 58 analysts surveyed by LSEG rated Nvidia as a "buy" or a "strong buy." However, of the 38 analysts surveyed so far in July, only 21 still put the stock in one of those two categories. Fifteen analysts now rate Nvidia as a "hold" with two recommending investors sell the stock. The average 12-month price target for Nvidia compiled by LSEG from 48 analysts is a little below the current share price. The most pessimistic analyst (admittedly an outlier) thinks the stock could plunge more than 60%. It's a much better story for Broadcom. LSEG surveyed 29 analysts this month to get their take on the stock; 27 of them rated it as a "buy" or a "strong buy." The remaining two analysts rate Broadcom as a "hold." Granted, Wall Street doesn't think Broadcom will deliver the sizzling gains over the next 12 months that it has over the past year. However, the average price target for the stock reflects an upside potential of nearly 10%. What changed to make Wall Street more bullish about Broadcom than Nvidia? The simple answer is that Nvidia has become a victim of its own success. The stock is up more than 160% so far in 2024. This impressive performance comes on the heels of a gain of nearly 240% last year. Many analysts think Nvidia's sales will continue to grow robustly, but this growth is already baked into the share price. NewStreet Research analyst Pierre Ferragu even downgraded Nvidia stock recently from a "buy" to "neutral." He wrote to investors that he sees "limited further upside" for Nvidia after its tremendous returns over the last 18 months or so. Meanwhile, Broadcom's valuation remains relatively attractive despite its strong gains. The stock trades at 29 times forward earnings, well below Nvidia's forward earnings multiple of 49. I agree with analysts in some ways. Although Broadcom's valuation isn't exactly cheap, the company doesn't have to generate the dizzying level of growth that Nvidia must deliver to justify its premium price. You could argue that Broadcom is a lower-risk pick. It wouldn't surprise me at all if Broadcom hits the average analysts' price target over the next 12 months (and probably sooner). The company should enjoy solid growth over the next few quarters from its VMware acquisition and demand for its AI accelerators. However, I'm not completely on the same page as Wall Street's views about Nvidia. I've been guilty in the past of underestimating the chipmaker's growth potential. My hunch is that Nvidia's launch of its new Blackwell platform in the coming months could go better than most analysts expect. If so, look for multiple rounds of upward price target revisions in the not-too-distant future.

Will Broadcom Stock Soar After Its 10-for-1 Stock Split? Here's What History Shows. | The Motley Fool

The "decline" for Broadcom will be the equivalent of dividing one piece of pizza into 10 slices. The slices are smaller, but there's just as much pizza to enjoy. With pizza, though, there's no chance that the smaller slices will miraculously grow larger. It just might be a different story with Broadcom. Will the stock soar after its 10-for-1 stock split? Here's what history has shown. Has Broadcom split its shares in the past? Yes and no. It depends on which Broadcom we're talking about. Confused? Allow me to explain. Broadcom Corporation was founded in 1991. The company conducted an initial public offering in April 1998, listing its shares on the Nasdaq stock exchange under the ticker "BRCM." Less than a year later, Broadcom conducted a 2-for-1 stock split on Feb. 18, 1999. It did another 2-for-1 stock split on Feb. 14, 2000. Then Broadcom split its shares 3-for-2 on Feb. 22, 2006. Avago acquired Broadcom in 2016. The company retained its stock ticker of "AVGO" but assumed the Broadcom name with the transaction. Avago had never conducted a stock split. Until now, the "new" Broadcom had not split its stock, either. How did the "old" Broadcom stock perform after its three stock splits? There's more murkiness. Immediately following the 2-for-1 split in February 1999, Broadcom's shares rose modestly, then fell. However, the stock skyrocketed throughout the rest of the year with the dot-com boom in full swing. Those huge gains led to the company's second stock split in February 2000. The stock again moved higher after the split, and then declined. By the end of the year, though, Broadcom's share price was significantly lower as the dot-com bubble burst. It was a similar story with Broadcom's 3-for-2 split in February 2006. Shares rose for a few days after the split, then gave up the gains. By the end of 2006, Broadcom stock had fallen by nearly 30%. Is there any reason for investors to expect better results with Broadcom's recent 10-for-1 stock split? Actually, yes. But you need to take a broader view by looking at the historical performance of more stocks conducting stock splits. Fortunately, Bank of America's Research Investment Committee has already performed a detailed analysis of all stock splits dating back to 1980. BofA's team found that stocks rose by an average of 25.4% in the 12 months after announcing a stock split. By comparison, the S&P 500 rose by an average of only 11.9% during these periods. Broadcom stock has risen roughly 17% since announcing its stock split on June 12, 2024. It still has some room to run to reach the historical average gain. However, there's a catch to consider. Bank of America's committee found that stocks conducting splits since 2010 have delivered lower average gains of 18.3% in the 12 months following the announcement of their stock splits. This more recent history doesn't give investors much to hang their hats on with Broadcom. I think the smartest approach for investors is to pay no attention to Broadcom's stock split. Instead, focus on the company's long-term prospects. The good news is that there are better growth drivers for the chipmaker. Broadcom's acquisition of VMware is already contributing significantly to its revenue growth. Demand for the company's artificial intelligence (AI) accelerators is also surging. I expect both will continue to push Broadcom's revenue and earnings higher.