AVGO vs OKTA: Which Enterprise Security Stock is a Buy?

Broadcom AVGO and Okta OKTA are major players in enterprise security software. AVGO offers Endpoint Security, Network Security, and Identity Security solutions, while OKTA provides cloud-based identity solutions. Strong demand for AI infrastructure and data center build-outs is driving growth for both companies. AVGO's Infrastructure Software solution saw a 25% YoY revenue increase in Q2, with expected growth of 16% in Q3. OKTA's cloud-based identity solutions are scalable and secure, with a growing customer base. Both stocks have appreciated 22.2% and 21.1% YoD, respectively.

Broadcom AVGO and Okta OKTA are major players in the enterprise security software market. AVGO offers a range of solutions including Endpoint Security, Network Security, and Identity Security, while OKTA specializes in cloud-based identity solutions. The strong demand for AI infrastructure and data center build-outs is driving growth for both companies.

Broadcom’s Infrastructure Software solution saw a 25% year-over-year (YoY) revenue increase in the second quarter of fiscal 2025, with expectations for a 16% growth in the third quarter. This growth is driven by the successful conversion of enterprise customers to the full VMware Cloud Foundation software stack subscription and updates to VMware vDefend, which enhance security planning and lifecycle management [1].

Okta’s cloud-based identity solutions are scalable and secure, with a growing customer base. The company’s revenue model is nearly entirely subscription-based, with professional services making up a small remainder. Recent performance indicates that Okta’s stock has declined by approximately 5.2% over the past 12 months, reflecting broader market sell-offs and heightened macroeconomic uncertainty [2].

Both stocks have appreciated significantly, with AVGO and OKTA shares rising 22.2% and 21.1% year-to-date (YoD), respectively. AVGO’s earnings estimate for fiscal 2025 is pegged at $6.64 per share, while OKTA’s estimate for fiscal 2026 is $3.28 per share [1].

Okta’s innovative portfolio, along with a strong partner base, is a key catalyst for growth. The company has more than 7,000 integrations with cloud, mobile, and web applications and IT infrastructure providers as of April 30, 2025. Okta’s dollar-based net retention rate of 107% indicates strong upsell potential from existing customers, while its total subscription backlog provides visibility into future revenue [2].

In terms of valuation, OKTA trades at a forward P/E of about 28× and a forward price/sales multiple of approximately 5.4×, reflecting a premium to its peers. AVGO, on the other hand, is trading at a significantly higher multiple of 18.55× [1].

Both companies are well-positioned to capitalize on the growing demand for cybersecurity solutions, driven by the increasing complexity and frequency of cyberattacks. However, Okta’s innovative portfolio and strong partner base make it a more attractive investment compared to Broadcom, which has a Zacks Rank #3 (Hold) versus Okta’s Zacks Rank #2 (Buy) [1].

References:
[1] https://finance.yahoo.com/news/avgo-vs-okta-enterprise-security-171700344.html
[2] https://finimize.com/content/okta-asset-snapshot