Key points
- Broadcom designs, develops and supplies semiconductors.
- The company’s products include Wi-Fi access points and data center solutions.
- AVGO will undergo a 10-for-1 stock split on July 12 after trading closes.
Broadcom is a semiconductor and software company with an extensive portfolio of products. These include storage solutions, wired and wireless connectivity, and enterprise software.
In June 2024, the company announced a 10-for-1 stock split. AVGO’s stock price has increased significantly over the past few years. Stock splits make the company more accessible to retail investors.
Broadcom stock price
AVGO’s price has increased significantly in recent years. In late 2022, the stock sold for under $500. By mid-2024, it rose to over $1,400, prompting the split.
Broadcom is among the tech companies that have benefited from the artificial intelligence boom. It provides various enterprise automation solutions powered by AI and machine learning.
Most of Broadcom’s revenue comes from semiconductors. In the second quarter of 2023, it derived 22% of revenue from infrastructure software. That figure increased to 42% a year later, making the company more well rounded.
How has the Broadcom stock price performed?
In 2016, Avago Technologies acquired Broadcom, which trades under the ticker AVGO. The stock has performed exceptionally well since it appeared on the Nasdaq in 2009. AVGO went public for $15 per share.
Unlike many tech companies, Broadcom has profited nearly every quarter since its initial public offering. This may explain its upward trend.
Even when AVGO has dipped, the fall hasn’t been as dramatic as some stocks. For example, it decreased from about $317 in February 2020 to under $200 a month later. It dropped from about $665 in December 2021 to under $450 by late 2022. But the stock rebounded after each decline.
That said, the company might be overvalued, with the market overzealous about AI growth prospects. Still, it has rewarded long-term investors who have held on to the stock.
Broadcom earnings
Broadcom’s last few earnings reports show positive signs, including increasing revenues. The company also beat earnings per share and revenue projections in the past four quarters. In the fourth quarter of 2023, it increased its dividend by 14% to $5.25.
But not everything in Broadcom’s earnings reports is good news. For example, net income decreased by nearly $2.5 billion in the first quarter of 2024 from the previous year. It decreased by nearly $1.4 billion in the second quarter from a year prior. Cash and cash equivalents decreased in both quarters. Diluted EPS decreased by $5.96 and $3.73 in Q1 and Q2, respectively, from the previous year.
In its second-quarter earnings release, the company raised its fiscal 2024 sales outlook from $50 billion to $51 billion. Management also increased its expected AI chip sales to $11 billion for 2024, up from $10 billion.
Broadcom at a glance
Broadcom’s history dates back to the 1960s when it introduced LED dot matrix displays. The company developed new technologies for displays and networking over the next several decades. By the early 2000s, it had shipped over 4 million fiber optic transceivers. It shipped its 200 millionth optical mouse sensor in 2003. By 2009, that figure had climbed to 1 billion.
Avago Technologies was established in 2005 and became the world’s largest privately held semiconductor company. Broadcom acquired several companies in the 2000s. These include Infineon Technologies’ fiber and bulk acoustic wave businesses.
Throughout the 2010s, Broadcom continued developing networking technologies. It also continued its string of acquisitions. In 2016, Avago acquired Broadcom, and Broadcom Ltd. was formed.
In 2023, Broadcom acquired VMware Inc., a virtualization and cloud computing company. It also introduced the industry’s first switch with an on-chip neural network.
Broadcom controversies
Like many tech companies, Broadcom has faced controversies related to mergers and acquisitions. For example, its 2023 acquisition of VMware received criticism in Europe. Business users called out the unjustifiable price hikes and rebundling of products.
In 2021, the Federal Trade Commission charged Broadcom with monopolizing the market for semiconductor components that deliver TV and broadband internet. The parties settled, with Broadcom prohibited from entering into certain exclusivity or loyalty deals with customers. It also agreed not to condition chip access on exclusivity or loyalty agreements. This includes not retaliating against customers that do business with its competitors.
Broadcom IPO
Broadcom went public on April 17, 1998, trading under the ticker BRCM. It offered 3.5 million shares for $24 each. The IPO was seen as a success because the company had expected a price of around $12 per share. Broadcom raised a total of $78.1 million in the IPO.
On Aug. 18, 2009, Avago Technologies went public at $15 per share. Avago hadn’t yet acquired Broadcom. When Avago acquired Broadcom in 2016, AVGO became Broadcom’s stock ticker.
Broadcom stock splits
As mentioned, Broadcom went public in 1998 for $24 per share. The stock surged in its initial offering, closing at more than double the opening price. The backdrop of this rise was the dot-com era when investors poured money into internet companies. In 1998, the company produced chips that enabled internet access via TV sets.
BRCM split 2-for-1 in February 1999. In February 2000, the stock split 2-for-1 again. It split 3-for-2 in February 2006.
When Avago acquired Broadcom in 2016, it adopted the Broadcom name but kept the AVGO ticker. Though AVGO has climbed rapidly since its 2009 IPO, it hasn’t yet split its stock. The first stock split, which will be 10-for-1, is slated for July 2024.
Broadcom stock split 2024
In June 2024, Broadcom announced a 10-for-1 stock split. At market close on July 12, shareholders will receive nine additional shares for each share held. Broadcom said the split will make AVGO “more accessible to investors and employees.”
Trading will begin on a split-adjusted basis on July 15. The stock will undergo its split after the market closes on Friday, July 12. Future dividends will be issued on a split-adjusted basis.
Broadcom stock split history
| Date of split | Type of split |
|---|---|
July 12, 2024 | 10-for-1 |
Opportunities and obstacles facing Broadcom
Broadcom’s biggest opportunity is its key markets should continue growing. These include semiconductors, data centers and artificial intelligence. In a presentation, the company revised its AI revenue target from 25% to 35% for fiscal 2024. This target is a percentage of semiconductor solutions revenue. Broadcom expects AI to bring in over $10 billion in revenue for fiscal 2024.
The company has also completed several strategic acquisitions over the years. Future acquisitions may present opportunities to enter new markets and improve economies of scale.
But legal and regulatory challenges may weigh heavily on Broadcom. It has already been the target of government regulations. These could increase as it grows.
Competition is another obstacle. Though Broadcom’s revenue is increasing, many strong players exist in the semiconductor industry. These include Qualcomm, Nvidia and Intel. Broadcom must maintain a strong position to keep up with these companies.
Strengths
- Strong portfolio of products, including broadband, data centers and automation.
- Increasing revenues.
- Strategic acquisitions have allowed Broadcom to expand its capabilities and enter new markets.
Weaknesses
- A sizeable net debt load of $64 billion was reported in April 2024.
- Successful integration of acquired companies like VMware can be challenging.
- Negative net change in cash in the past two quarters.
Nasdaq: Broadcom comparison
Broadcom is one of the top stocks in the Nasdaq composite index, with a weight of 2.59% as of June 28, 2024.
The table below lists the 10 stocks with the greatest weights in the Nasdaq by market cap. It’s reordered daily at market close.
Broadcom stock forecast 2024
Analysts expect a slight increase in earnings for 2024, projecting a full-year EPS of $47.58. That compares to $42.25 a year ago. Revenue is expected to see a much larger increase. Analysts project it will climb from $35.8 billion in 2023 to $51.5 billion in 2024. That represents a 43.7% increase in revenue.
Broadcom attributes the acceleration in revenue growth to its VMware acquisition. It says demand for networking products and AI solutions is also driving revenue growth.
Among 44 analysts, 28 recommend buying AVGO and seven recommend holding it. Nine analysts rate the stock as “overweight.” The average target price is about $1,903.94, or $190.39 post-split.
Broadcom stock forecast 2025
Projected 2025 earnings are $60.41 per share. That’s a noticeable increase from the $47.58 estimate for 2024. The 2025 revenue forecast is $60 billion. That also represents an increase, albeit smaller than the increase for 2024.
Making long-term predictions for individual stock prices is difficult. Past performance is no guarantee of future results. Whether a stock has done well or fared poorly, the tide can turn overnight.
What can we expect in the coming years?
Broadcom is well positioned to continue its high-growth pace. This may happen if it continues to be a leader in semiconductors, data centers and AI. All three segments are expected to grow in the coming years.
Investors can also expect Broadcom to continue strategic acquisitions and research and development. These will help the company stay competitive and capitalize on emerging industry trends. But acquisitions can lead to increasing debt loads, which Broadcom must manage going forward.
Of course, Broadcom won’t be the only company striving to take advantage of industry trends. Nvidia and Qualcomm will also compete for customers hungry for chips. There is plenty of demand. But Broadcom must continue to innovate in the years ahead.
Frequently asked questions (FAQs)
The average price target for Broadcom stock is about $1,903.94, or $190.39 post-split. Among the 44 analysts surveyed, 28 recommend buying AVGO.
At the time of writing, Broadcom stock reached an intraday high of $1,851.62 on June 18, 2024. Adjusted for the stock split, that’s $185.16.
Broadcom stock split three times under its old ticker of BRCM: in 1999, 2000, and 2006. AVGO will split for the first time on July 12, 2024, after the market closes. It will be 10-for-1.
Broadcom pays a quarterly dividend. The current yield is 1.2%.
