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Broadcom today

US$217.59 +36.93 (+20.44%)

(As of 1:27 p.m. ET)

52 week range

$104.15

▼

$221.65

Dividend yield

0.97%

P/E ratio

189.04

Target price

$215.96

Broadcom NASDAQ: AVGO is on the verge of turning the Magnificent Seven into an Eight. Mag Seven is the leading US stock by market capitalization, all technology stocks, and the only US stock with a trillion-dollar market capitalization. Broadcom came in about 17% below the target included in its first-quarter 2025 earnings report; After this, the jump in stock prices went through the roof, rising almost 17%, reaching a critical level and setting a new all-time high. With the results driven by fundamental strengths, including strong demand for AI-related products as well as a promising multi-generational AI upgrade cycle, Broadcom shares are likely to continue rising, enter the trillion-dollar market cap zone and roll out the Mag Seven. to the Eight.

Broadcom: an intelligent game with artificial intelligence

Broadcom reported mixed results; however, the bar has been set high, with revenue growth accelerating to over 50%, so the expected revenue figure is much higher than it might seem. The company’s growth is driven by strength in both segments, led by a 196% increase in the infrastructure software segment. Its software products are critical to building and scaling AI. They are used by leading hyperscalers and the companies that use them, including Apple. NASDAQ:AAPLGoogle NASDAQ: GOOGLEand metaplatforms NASDAQ: META. Semiconductors, the largest business segment, grew 12%.

Margin is another strength. Broadcom maintained its profitability and generated better-than-expected cash flow despite the impact of the restructuring, allowing the board to significantly increase its dividend. Cash flow was $5.604 billion compared to the prior year, with free cash flow accounting for $5.482 billion, or about 39% of revenue. The net result was adjusted earnings of $1.42, up 28% from last year and $0.03 better than the MarketBeat consensus.

The company’s management is also good. It issued strong guidance for the first quarter, forecasting 22% year-on-year growth on top of the 34% reported last year and wider margins. EBITDA margin is expected to improve 100 basis points and 600 sequentially year-over-year, leading to higher leveraged cash flow and higher free cash flow. The forecast also exceeds consensus estimates, causing analysts to raise their results and stock price estimates.

Analysts raise targets for AVGO shares and point to $250

Analyst reaction to Broadcom’s results is clear, with MarketBeat tracking that more than a dozen companies raised their stock price targets. All of the new targets are above $200, and most of them, about 60%, place the market in the $240 to $250 range. From the conversations, Broadcom has increased confidence in the prospects of established businesses and impressed the market with long-term guidance for customized AI work. The company projects its custom business to be $90 billion by 2027, representing 150% of its 2024 business, and it may be cautious in its estimates. Given this and the resilient business, analysts will likely continue to raise targets as we move toward 2025.

Broadcom’s balance sheet and return on equity will also boost the share price over time. Despite the acquisitions, the company maintains a strong balance sheet and has significantly raised shareholders’ equity in 2024. Highlights include assets that more than doubled the intangible assets acquired and goodwill associated with the VMWare acquisition, only partially offset by increased liabilities. Capital grew nearly 3x year-on-year, resulting in long-term leverage of approximately 1x and the business becoming healthy. In terms of return of capital, the company increased its dividend by 11% for 2025, which is about 35% of expected earnings, and is likely to be increased by double digits again later in the year.

Broadcom stock price goes through the roof

Broadcom’s stock price rose more than 15% on the news and analysts’ reactions, rising to a new all-time high. This decision has brought the market to the $212 level, where it may experience some volatility. At this level, the market is at an all-time high and a significant gap has opened up that could lead to profit taking. In this scenario, the market could retreat as deep as the previous day’s close before rallying and making new highs.

You’ll want to hear this before you consider Broadcom.

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