What Analysts Think of Broadcom Stock Ahead of Earnings

As Broadcom Inc. (AVGO) prepares to report its fiscal first-quarter earnings after the market closes on Thursday, analysts are overwhelmingly bullish on the chipmaker's prospects. All 12 analysts who follow Broadcom and are tracked by Visible Alpha have a "buy" or equivalent rating for the stock, with a consensus price target of roughly $195. That's nearly 10% above Thursday's intraday price close to $178.

Broadcom is expected to report revenue of $14.06 billion, up 51% year-over-year, and net income of $3.52 billion or 76 cents per share, compared with $3.52 billion or 83 cents per share a year earlier. Last quarter, Broadcom posted a loss of $1.88 billion due in part to increased expenses related to its November 2023 acquisition of software company VMware.

Shares of Broadcom were down 3% Thursday morning, but are up 60% in 2024. The company's stock has lost about one-quarter of its value since hitting an all-time high in December.

Analysts are optimistic about Broadcom's earnings prospects, citing the company's strong performance in the semiconductor and AI markets. Broadcom's revenue from AI products was a record $3.1 billion during the second quarter of fiscal 2024, and the company's infrastructure software revenue accelerated as more enterprises adopted the VMware software stack to build their own private clouds.

Broadcom's President and CEO Hock Tan said in a release, "Broadcom's second quarter results were once again driven by AI demand and VMware. 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."

Analysts also point to Broadcom's strong balance sheet and cash flow as reasons to be bullish on the company's stock. Broadcom's cash and cash equivalents at the end of the fiscal quarter were $9.809 million, compared to $11.864 million at the end of the prior quarter. During the second fiscal quarter, the company generated $4.580 million in cash from operations and spent $132 million on capital expenditures.

Broadcom's stock price has been volatile in recent months, but analysts believe that the company's strong fundamentals and growth prospects make it a compelling investment opportunity. As one analyst put it, "Broadcom's earnings are expected to be strong, and the company's stock price is likely to reflect that strength in the coming quarters."