Broadcom’s AVGO stock ascended over +15% in early morning trading, soaring to all-time highs today on the back of remarkable fiscal second-quarter performance driven by AI innovations.
Following the impressive Q2 results announcement on Wednesday evening, investors are left pondering if the current surge presents an opportune moment to dive into Broadcom’s stock.
Profitable Q2 Venture
Broadcom’s Q2 revenue of $12.48 billion marked a 43% leap from the $8.73 billion recorded in the corresponding period, surpassing estimates of $12.04 billion by 4%. The surge in revenue was primarily propelled by AI earnings of $3.1 billion, reflecting a staggering 280% surge from the previous year’s quarter, instigating the bullish momentum.
On the earnings front, Q2 EPS stood at $10.96, slightly outperforming the projected $10.79 per share by 1% and escalating by 6% from the $10.32 per share reported a year ago.
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Robust Projections
In contrast to Nvidia NVDA, Broadcom’s focus hasn’t been exclusively on AI in its semiconductor offerings; however, the company anticipates continued AI strength. Broadcom’s cutting-edge networking chips have played an instrumental role in managing copious volumes of data required for AI applications like OpenAI’s ChatGPT.
This positive trajectory led Broadcom to revise its full-year revenue outlook for fiscal 2024 from $50 billion to $51 billion, surpassing the current Zacks Consensus of $50.54 billion or 41% growth. Moreover, projections suggest a further 13% increase in Broadcom’s total sales in FY25 based on Zacks estimates.
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Stock Dividend Movement
Mirrorring Nvidia’s decision, Broadcom has unveiled a 10-1 stock split designed to broaden stock ownership reach for retail investors and employees. The split is slated to commence on Monday, July 15, with shareholders on record by Thursday, July 11, set to receive an additional 9 shares post the market close on Friday, July 12.
With current shares trading at over $1,600, Broadcom’s stock has surged +50% year-to-date, outperforming major indices, although lagging behind Nvidia’s whopping +159% growth.
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In Conclusion
Broadcom’s stock currently holds a Zacks Rank #2 (Buy) as the incorporation of AI begins to amplify the company’s appealing future prospects. Anticipated elevation in earnings estimates following the tech titan’s impressive Q2 results is likely to keep the bullish momentum intact.