Broadcom Stock Soars: Analysts Predict Further Growth Post-Split

Is Broadcom Stock Going to $210? 1 Wall Street Firm Thinks So. | The Motley Fool

This top data center play has delivered outstanding returns to investors over the past two years. Broadcom (AVGO 0.51%), an infrastructure technology leader, has delivered market-smashing returns to investors in recent years. Despite a recent dip in the share price, analysts at TD Cowen believe investors should stay the course. The firm recently adjusted its price target to $210, down from $1,750, to account for the recent 10-for-1 stock split. The shares trade around $155 at the moment after hitting a 52-week high of $185 this year. Here's why TD Cowen believes Broadcom stock can hit new highs over the next 12 months. Broadcom is seeing strong demand for its artificial intelligence (AI) networking and semiconductor solutions in the data center market. Revenue grew 12% year over year in the fiscal second quarter ending May 5, which excludes the revenue contribution from last year's acquisition of VMware. Including VMware's revenue, Broadcom's total revenue was up 43% over the year-ago period. TD Cowen analysts like Broadcom because of its broad exposure to several markets, including data centers, AI infrastructure, telecommunications, and enterprise. Spending on data center infrastructure is growing rapidly as companies scramble to get ahead in AI technology, which should continue to drive strong growth for Broadcom's business for the foreseeable future. The stock trades at a forward price-to-earnings (P/E) ratio of 33, but TD Cowen says the premium is worth it. One reason is because of Broadcom's software opportunity; its infrastructure software revenue nearly tripled year over year last quarter to $5.7 billion. Broadcom is in the process of transitioning all of VMware's products to a subscription model, which could benefit margins and earnings growth. The Wall Street consensus expects the company's earnings to increase at an annualized rate of 17% over the long term. This could potentially double the share price within five years, assuming the stock continues to trade at the same P/E multiple. For these reasons, it's possible Broadcom could hit TD Cowen's price target within the next few years, if not sooner.

Broadcom Just Split Its Stock. History Says This Is What the Stock Will Do Next. | The Motley Fool

Broadcom stock has soared in the triple digits over the past three years. In recent months, stock splits have stirred up a lot of excitement in an already effervescent bull market. Companies in a wide variety of industries, from retail to technology, have launched these splits to bring down the prices of their shares after a long period of gains. Investors generally applaud stock splits because a lower per-share price makes it easier for a wider range of buyers to get in on the investment opportunity. Technology giant Broadcom (AVGO -1.19%) is the latest to join the list of exciting stock-split players such as Nvidia and Chipotle Mexican Grill. The semiconductor and networking company completed its 10-for-1 split on July 12, and the shares began trading on a split-adjusted basis on July 15. Today, each share trades for about $170, versus $1,600 just a few weeks ago. Broadcom stock, even at its high per-share price tag, climbed more than 40% in the first half of the year, adding to a triple-digit three-year gain. Now the question is, at its new lower price, what will the stock do next? Let's look to history for some clues. First, a quick note on stock splits, in general. A stock split involves the issuance of additional shares -- the number determined by the ratio of the split -- to current shareholders. This, as mentioned, lowers the share price -- but it doesn't change anything fundamental about the company. Even though the price of one share is lower, the move doesn't impact the market value of the company, the value of your holding, or the stock's valuation. This means stock splits aren't reasons to buy or sell a particular stock. Instead, they're simply mechanical moves to adjust per-share prices. That said, they can be seen as positive for a company because they make it easier for smaller investors to get in on a particular stock without relying on fractional shares. Stock splits also suggest the company is confident about its future and the likelihood that the stock, from its new lower price, could soar once again. What does history tell us about what Broadcom stock may do following its recent split? Over time, companies that perform splits have shown market-beating performance in the 12 months following the announcement of a split. Historically, stock-split players have delivered an average total return of more than 25% over this period, compared to a return of just under 12% for the S&P 500, according to Statista, citing Bank of America's Research Investment Committee data. This doesn't mean investors are buying just because these companies split their stocks. Instead, these companies' solid long-term outlooks may have attracted investors -- and the new, lower per-share price has made it easier for more of these buyers to add the particular stock to their portfolios. All of this suggests Broadcom could be headed for more gains in the months to come, which is great news if you already hold the stock or are thinking of buying right now. Of course, it's important to remember that history doesn't always repeat itself. It's impossible to predict the performance of any given stock with 100% accuracy. The market and individual stocks could surprise investors negatively or positively at any time. This is why it's key to look ahead and consider whether a particular stock has what it takes to excel over the coming five to 10 years instead of focusing on short-term performance. If it does, now could be a great time to get in on that player. So is Broadcom a solid long-term buy? The company is benefiting from the high-growth area of artificial intelligence (AI), but it isn't entirely dependent on it. It's also generating impressive growth from its recent acquisition of cloud software business VMware and is well diversified, selling thousands of products used in areas from data center networking to home connectivity and factory automation. All of this makes Broadcom, trading at 36x forward earnings estimates, a buy today -- whether it follows history's lead and soars over the coming 12 months or not.

Here's Why Broadcom Stock Rose 44% in the First Half of 2024 | The Motley Fool

Shares of Broadcom (AVGO -7.40%) climbed 43.8% in the first six months of the year, according to data provided by S&P Global Market Intelligence. Investors reacted to strong quarterly earnings driven by demand for hardware supporting artificial intelligence (AI) applications. That trend lifted several semiconductor stocks during the first half of 2024. Investors also seemed pleased with Broadcom's stock split, which was announced in June. AI stocks have serious momentum, and semiconductors have been a popular focus for that trend in 2024. Microchip makers struggled in 2023 due to weakness in the automotive and consumer electronics markets. Many of the largest semiconductor companies struggled with weak sales volume and unit prices. Fortunately, AI software applications often require high-performance hardware to function properly, resulting in higher-than-expected demand for new-generation semiconductors. Broadcom was one of the biggest beneficiaries of that catalyst. Its performance closely tracked the iShares Semiconductor ETF throughout early 2024, illustrating the persistent industrywide momentum. Broadcom boasted impressive financial results to support the stock's momentum. It beat Wall Street forecasts for revenue and earnings in its March quarterly report. Sales rose 34% in the quarter, resulting in nearly $4.7 billion in free cash flow, which was an impressive 39% of revenue. The company increased its full-year revenue guidance based on strong demand for AI chips. Those are impressive results for a company that's still struggling with cyclical issues in one of its major business units. Broadcom's June report was even better. The company accelerated to 43% revenue growth, smashing analyst expectations. Its free-cash-flow margin declined slightly, but it still managed to deliver impressive cash flows and wide profit margins. The strong results attracted investor attention, sending the stock's forward P/E ratio above 28. Broadcom also announced an upcoming stock split during its June financial report. Its share price had risen above $1,700, and the company executed a 10-for-1 stock split that significantly reduced its price per share. In theory, splits shouldn't impact a company's valuation. They don't change anything about the underlying company's sales, profits, or cash flows. When a split occurs, holders should have 10 times as many shares, but each share should be worth one-tenth of their previous value. However, there's historical precedent for valuations climbing higher after splits. Nvidia is a noteworthy recent example. Lower share prices can improve liquidity by making them more accessible to retail investors. The wide availability of fractional shares should dull this effect, but it's a potential demand catalyst in the eyes of many. Splits usually occur when a company's strong performance causes share prices to spike, so they tend to coincide with momentum. The self-fulfilling potential could be enough to spark urgency or positive attention for people who want to participate in a news-driven rally.

Broadcom Just Split Its Stock. History Says This Is What the Stock Will Do Next.

In recent months, stock splits have stirred up a lot of excitement in an already effervescent bull market. Companies in a wide variety of industries, from retail to technology, have launched these splits to bring down the prices of their shares after a long period of gains. Investors generally applaud stock splits because a lower per-share price makes it easier for a wider range of buyers to get in on the investment opportunity. Technology giant Broadcom (NASDAQ: AVGO) is the latest to join the list of exciting stock-split players such as Nvidia and Chipotle Mexican Grill. The semiconductor and networking company completed its 10-for-1 split on July 12, and the shares began trading on a split-adjusted basis on July 15. Today, each share trades for about $170, versus $1,600 just a few weeks ago. Broadcom stock, even at its high per-share price tag, climbed more than 40% in the first half of the year, adding to a triple-digit three-year gain. Now the question is, at its new lower price, what will the stock do next? Let's look to history for some clues. First, a quick note on stock splits, in general. A stock split involves the issuance of additional shares -- the number determined by the ratio of the split -- to current shareholders. This, as mentioned, lowers the share price -- but it doesn't change anything fundamental about the company. Even though the price of one share is lower, the move doesn't impact the market value of the company, the value of your holding, or the stock's valuation. This means stock splits aren't reasons to buy or sell a particular stock. Instead, they're simply mechanical moves to adjust per-share prices. That said, they can be seen as positive for a company because they make it easier for smaller investors to get in on a particular stock without relying on fractional shares. Stock splits also suggest the company is confident about its future and the likelihood that the stock, from its new lower price, could soar once again. What does history tell us about what Broadcom stock may do following its recent split? Over time, companies that perform splits have shown market-beating performance in the 12 months following the announcement of a split. Historically, stock-split players have delivered an average total return of more than 25% over this period, compared to a return of just under 12% for the S&P 500, according to Statista, citing Bank of America's Research Investment Committee data. This doesn't mean investors are buying just because these companies split their stocks. Instead, these companies' solid long-term outlooks may have attracted investors -- and the new, lower per-share price has made it easier for more of these buyers to add the particular stock to their portfolios. Is Broadcom heading higher or lower? All of this suggests Broadcom could be headed for more gains in the months to come, which is great news if you already hold the stock or are thinking of buying right now. Of course, it's important to remember that history doesn't always repeat itself. It's impossible to predict the performance of any given stock with 100% accuracy. The market and individual stocks could surprise investors negatively or positively at any time. This is why it's key to look ahead and consider whether a particular stock has what it takes to excel over the coming five to 10 years instead of focusing on short-term performance. If it does, now could be a great time to get in on that player. So is Broadcom a solid long-term buy? The company is benefiting from the high-growth area of artificial intelligence (AI), but it isn't entirely dependent on it. It's also generating impressive growth from its recent acquisition of cloud software business VMware and is well diversified, selling thousands of products used in areas from data center networking to home connectivity and factory automation. All of this makes Broadcom, trading at 36x forward earnings estimates, a buy today -- whether it follows history's lead and soars over the coming 12 months or not. 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 $787,026!* 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. Adria Cimino has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bank of America, Chipotle Mexican Grill, and 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.