Our Twist Take On Wall Street’s New Sweetheart: Upgrading Broadcom To Buy

Summary:

• Broadcom Inc. reported its 4QFY24 earning results and outlook this month, causing the stock to skyrocket by +30% on the one-month chat.
• We like the stock for its unique position in AI custom ASIC with its own set of hyperscaler customers, and expect that to drive outperformance in 1H25.
• It’s not all rainbows and butterflies; we see a risk for AVGO in 2H25 on the loss of Apple’s business, a +20% customer of the company.
• For 1H25, we think AI-related sales will be able to offset the loss of Apple’s business.
• We expect AVGO to outperform the peer group in 1H25 and hence are upgrading AVGO stock from hold to buy.

Broadcom Inc. (NASDAQ:AVGO) has been on a tear since reporting its 4QFY24 earning results and outlook; the one-month chart below showcases the run-up with AVGO up ~32% against the S&P 500 (

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. 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.

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