Broadcom (AVGO) Barely Clears Earnings Bar—Wall Street Yawns

Another quarter, another 'meets expectations' shrug from Big Tech.

Broadcom’s latest financials just edged past analyst forecasts—because nothing says 'thriving innovation' like scraping by on lowered targets. The semiconductor giant posted numbers that would’ve been impressive in 2022, but now? Just enough to keep the institutional bagholders from hitting the sell button.

Funny how these tech titans keep 'beating estimates' while their stocks flatline. Maybe next quarter they’ll promise blockchain integration.

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The Silicon Valley-based company announced earnings per share (EPS) of $1.58, which was ahead of the $1.56 expected among analysts. Revenue of $15 billion edged the $14.99 billion consensus expectation of analysts. Sales were up 20% year-over-year.

In addition to the solid print, Broadcom’s management team offered robust forward guidance, saying they now expect about $15.80 billion in Fiscal third-quarter revenue, versus $15.70 billion that was expected on the Street.

Broadcom’s income statement.: Main Street Data

AI Impacts

Broadcom said it had $4.40 billion in AI revenue during the latest quarter. Looking ahead, Broadcom said that it expects $5.10 billion in AI chip sales during the current quarter, adding that “hyperscale partners continue to invest.” Hyperscalers refers to companies that build large cloud systems such as Amazon (AMZN) and Microsoft (MSFT).

Sales to hyperscalers are reported in Broadcom’s semiconductor solutions business unit, which had $8.4 billion in revenue during the quarter, a 17% increase from last year, and above the $8.34 billion that analysts estimated. The software business, which includes VMware, grew 25% year-over-year to $6.6 billion in sales during the quarter. AVGO stock has risen 13% this year.

Is AVGO Stock a Buy?

Analysts have a consensus Strong Buy rating on AVGO stock based on 27 Buy and two Hold recommendations issued in the last three months. The average AVGO price target of $256.04 implies 1.50% downside risk from current levels. These ratings are likely to change after the company’s financial results.