Broadcom (AVGO) stock jumped more than 14% out of the gate Thursday after the chipmaker beat expectations for its fiscal second quarter, raised its full-year outlook and announced a 10-for-1 stock split.
In the quarter ended May 5, Broadcom's revenue increased 43% year-over-year to $12.5 billion, driven by a nearly tripling of revenue in its Infrastructure Software segment to $5.3 billion. The company said earnings per share (EPS) rose 6.2% from the year-ago period to $10.96.
"Broadcom's second quarter results were once again driven by artificial intelligence (AI) demand and VMware," Broadcom CEO Hock Tan said in a statement. "Revenue from our AI products was a record $3.1 billion during the quarter. Infrastructure software revenue accelerated as more enterprises adopted the VMware software stack to build their own private clouds."
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Broadcom completed its acquisition of cloud software firm VMware in November 2023.
The company's top- and bottom-line results beat analysts' expectations. According to CNBC, Wall Street was anticipating revenue of $12 billion and earnings of $10.84 per share.
As a result of its strong performance in the first half of its fiscal year, Broadcom raised its full-year outlook. The company now anticipates revenue of approximately $51 billion, up from its previous estimate of $50 billion and ahead of analysts' expectations of $50.4 billion.
Broadcom also announced a 10-for-1 stock split in order "make ownership of Broadcom stock more accessible to investors and employees." Based on AVGO's current price of roughly $1,700, shares will be closer to around $170 once they start trading on a split-adjusted basis at the July 15 open.
Is Broadcom stock a buy, sell or hold?
According to S&P Global Market Intelligence, the consensus analyst target price for the tech stock is $1,751.48, representing implied upside of over 3% to current levels. Additionally, the consensus recommendation is Buy. However, analysts may revise their targets higher following the strong earnings release.
One of the firms raising their target price on AVGO stock following its earnings release is Susquehanna Financial Group, which maintained a Positive rating (equivalent to Buy) and raised its price target to $2,000 from $1,650.
"Broadcom is one of the best integrators in the business, continuing to prove the economies of scale are a viable driver of earnings power for those that can executive in the semiconductor industry," Susquehanna analyst Christopher Rolland said in a note.
Susquehanna's new $2,000 price target represents implied upside of about 18% to current levels.
Related Content
-
Student Visas: Older Americans' Ticket to Living in EuropeDo you envision strolling about Europe, a book in one hand, a glass of wine in the other? You could make that happen by studying there, even if you're older.
-
Three Reasons It May Be Time for an Annuity 'Refresh'Because of higher interest rates, inflation and newer annuity products, you could get a better deal today. Don't wait, though: Interest rates could start falling.
-
McDonald's Stock: How Small Changes Have Led to 100,000% ReturnsMcDonald's incremental operating improvements have added up over the years, sending the company's long-term profitability soaring.
-
Three Common Cash Flow Mistakes and How to Fix ThemBetter cash flow management could have a bigger impact on your retirement savings than simply making more money. Here's how to manage that.
-
Trusts for Child Influencers: What Families Need to KnowAs video blogging, or vlogging, gains popularity (and profitability), new laws are shaping financial obligations for caregivers of young creators.
-
Three Easy Financial Tips to Help Make This Year a SuccessEarly in a new year is the perfect time to assess where you are financially. Start by ensuring you're protected from fraud and evaluating your investments.
-
Stock Market Today: It's Mostly Onward and Upward for EquitiesThe major U.S. equity indexes were mixed Friday but closed an eventful week for earnings and data modestly higher.
-
Airbnb Stock Soars After Revenue, Earnings Top ExpectationsAirbnb stock soared Friday after the homestay and experiences platform beat fourth-quarter revenue and earnings expectations. Here's what you need to know.
