Broadcom: Compelling Buy, Thanks To Raised AI Guidance

Summary:

  • AVGO has established $1.2K as its floor, thanks to the robust networking sales growth in FQ1’24 and raised networking/ AI-related guidance in FY2024.
  • Much of the tailwinds are probably attributed to the highly insightful commentaries and promising forward guidance from multiple generative  AI players, lending strength to hyperscaler growth in general.
  • As a result, we believe that AVGO is likely to exceed consensus estimates in the upcoming June 12, 2024 earnings call, with another raise in AI-related guidance.
  • Readers must also note that its growing multi-year Remaining Performance Obligation and rich SaaS margins lend further insights to its long-term top/ bottom lines.
  • This is also why we believe that AVGO is reasonably valued, with the clear trading pattern offering interested investors with an improved margin of safety.

Portrait of a man mind-blown by AI

photoschmidt/iStock via Getty Images

We previously covered Broadcom (NASDAQ:NASDAQ:AVGO) in February 2024, discussing why we had finally upgraded the stock as a Buy, after multiple rounds of Hold rating.

This was attributed to its reasonable FWD valuations compared to


Analyst’s Disclosure: I/we have a beneficial long position in the shares of AVGO, NVDA, AMD, INTC either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

The analysis is provided exclusively for informational purposes and should not be considered professional investment advice. Before investing, please conduct personal in-depth research and utmost due diligence, as there are many risks associated with the trade, including capital loss.

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