Broadcom Inc logo on phone and site-by Majahid Mottakin via Shutterstock
Broadcom (AVGO) recently scaled a notable peak, touching a 52-week high of $281.18 on Thursday, July 10. The rise comes amid a broader market rally, where investors appear unfazed by lingering trade uncertainties.
Notably, Nvidia’s (NVDA) meteoric climb to a $4 trillion market capitalization seems to have cast a favorable shadow over Broadcom’s shares. Nvidia’s success is not merely an isolated triumph but a ringing endorsement of the entire artificial intelligence (AI) ecosystem.
The surge of AVGO stock alongside Nvidia highlights their intertwined destinies. While Nvidia provides the core processing power of AI through its GPUs, Broadcom’s high-performance networking chips, custom ASICs, and switching infrastructure are the vital backbone that keeps AI data centers operating smoothly at scale.
Both companies share a client base dominated by hyperscale cloud providers, making their fortunes tightly linked. As Nvidia’s valuation climbs higher, investors are starting to look beyond, rotating into companies like Broadcom with solid fundamentals, reliable dividends, and essential roles in powering the next wave of AI development.
Broadcom stands as a leading designer and global supplier of an extensive portfolio of semiconductor products. With a market cap of $1.3 trillion, its core expertise lies in complex digital and mixed-signal CMOS devices alongside analog III-V products.
Over the past 52 weeks, AVGO’s stock price has surged 61%, far outpacing many peers. The momentum has accelerated recently, with a 51% gain in just the last three months, easily eclipsing the broader S&P 500 Index’s ($SPX) nearly 17% return during the same period.
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Investors continue to value AVGO stock richly, with forward adjusted earnings trading at 50 times and sales at 25 times, well above the industry averages. The premium reflects confidence in the company’s growth trajectory and pricing power.
Adding to its appeal, Broadcom rewards shareholders with a dependable forward annual dividend of $2.30, yielding 0.84%. Remarkably, the company has raised this dividend consistently for 14 consecutive years. The most recent quarterly dividend of $0.59 was paid on June 30 to investors recorded as of June 20.
Broadcom unveiled its fiscal second-quarter results for 2025 on June 5, surpassing Wall Street’s expectations in a decisive fashion. The company reported record revenue of $15 billion, marking a 20% increase year-over-year (YOY) and slightly beating analysts’ consensus of $14.95 billion.
The robust top-line growth was driven by sustained momentum in AI semiconductor solutions and strength in VMware operations. Adjusted EBITDA soared 35% to $10 billion, underscoring the efficiency of Broadcom’s business model. Non-GAAP net income rose 44%, climbing to $7.8 billion from the prior year’s comparable quarter.
Non-GAAP EPS grew 43.6% YOY to $1.58, modestly outpacing the Street’s forecast of $1.57. Cash flow generation remained a highlight, with free cash flow hitting a record $6.4 billion, representing a 44% YOY increase. At quarter-end, the company held $9.47 billion in cash and equivalents.
The company’s outlook remains optimistic, propelled by accelerating demand for its products in AI and cloud infrastructure. The launch of VMware Cloud Foundation 9.0, featuring enhanced AI capabilities, further cements Broadcom’s cloud presence.
Management anticipates Q3 2025 revenue of roughly $15.8 billion, a 21% increase from the year-ago quarter. AI semiconductor revenue is expected to accelerate to $5.1 billion, marking ten straight quarters of growth as hyperscale partners continue heavy investments.
Adjusted EBITDA is forecast to remain strong, at no less than 66% of projected revenue. Meanwhile, analysts project third-quarter EPS growth of 31% to $1.34, while full fiscal 2025 EPS is expected to climb 47% to $5.47. For fiscal 2026, the bottom line is estimated to rise another 28% to $7.04.
The consensus among analysts tilts decidedly bullish for Broadcom. Mizuho maintains an “Outperform” rating and recently raised its price target to $315, citing robust strength in AI chip demand and revised revenue forecasts for fiscal 2025 and 2026. JPMorgan similarly reiterated an “Overweight” rating, setting a $325 price target on the stock, emphasizing the company’s growing custom AI XPU business and persistent AI market opportunities.
Currently, Broadcom carries a “Strong Buy” consensus rating. Out of the 36 analysts covering the stock, 32 recommend “Strong Buy”, one rates the stock as a “Moderate Buy,” and three suggest a “Hold” rating.
The average price target of $296.13 represents potential upside of nearly 8%. Meanwhile, the Street-high target of $400, suggests a potential climb of almost 46% from current levels.
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On the date of publication, Aanchal Sugandh did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com
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