Broadcom (AVGO) stock is sinking Friday after the chipmaker beat top- and bottom-line expectations for its fiscal third quarter but issued an outlook for the fourth quarter that came up short of expectations.
In the quarter ended August 4, Broadcom's revenue increased 47.3% year-over-year to $13.1 billion, thanks in part to a nearly tripling in revenue for its infrastructure software segment to $5.8 billion. The company said earnings per share (EPS) were up 18.1% from the year-ago period to $1.24.
"Broadcom's third-quarter results reflect continued strength in our artificial intelligence (AI) semiconductor solutions and VMware," said Broadcom CEO Hock Tan in a statement. "We expect revenue from AI to be $12 billion for fiscal year 2024 driven by Ethernet networking and custom accelerators for AI data centers."
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
Sign up for Kiplinger’s Free 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.
The results came in ahead of analysts' expectations. Wall Street was anticipating revenue of $13 billion and earnings of $1.20 per share, according to CNBC.
However, sentiment turned negative toward the semiconductor stock after Broadcom provided its outlook on the fourth quarter. The company anticipates revenue of approximately $14 billion, which was just short of Wall Street's forecast for $14.04 billion. Still, the company's $14 billion forecast represents an increase of about 51% from the year-ago period.
Is Broadcom stock a buy, sell or hold?
Heading into Friday's session, Broadcom was up nearly 38% for the year to date. Unsurprisingly, Wall Street is very bullish on AVGO.
According to S&P Global Market Intelligence, the consensus analyst target price for the tech stock is $192.71, representing implied upside of 40% to current levels. Additionally, the consensus recommendation is Strong Buy.
Financial services firm Oppenheimer is one of the more bullish outfits on AVGO stock with an Outperform rating (equivalent to a Buy) and $200 price target.
"We believe AVGO has one of the most strategically and financially attractive business models in semiconductors," says Oppenheimer analyst Rick Schafer, citing its strong competitive edge in the high-end filter market, its diversified and "sticky" non-mobile business, its manufacturing advantage and its strong earnings and cash flow growth.
Schafer adds that Broadcom remains a top AI play after Nvidia (NVDA) as its data center AI networking and custom compute portfolio support "snowballing AI growth."
Related Content
-
I claimed Social Security six months ago at 62, but my checks are too small. What are my options?We asked financial experts for advice.
-
This Is How Much You'll Have to Pay to Share Streaming ServicesIt now costs more to share streaming services with family members who don't live with the account holder. Here's what Netflix, Amazon, Hulu and Disney+ charge.
-
Five Retirement Planning Traps You Can't Afford to Fall Into, From a Wealth AdviserTo help ensure you reach your savings goals and enjoy financial security in your golden years, be aware of these common pitfalls. The key is to be proactive, informed and flexible.
-
Your 401(k) Can Now Include Alternative Assets, But Should It? A Financial Adviser Weighs InMany employer-sponsored plans offer limited investment options, which can stunt growth. But participants considering alternatives might need some sound advice to get the most from their accounts.
-
Will Taxes Shred Your 401(k) or IRA During Your Retirement? It's Very LikelyConventional wisdom dictates that you save in a 401(k) now and pay taxes later, but turning that rule on its head could leave you far better off. A financial planner explains why.
-
More Retirees Are Renting: Should You? A Financial Adviser Weighs InIn some ways, renting is cheaper, more flexible and easier, but unless you understand the implications for your taxes and health costs, it might not be for you.
-
Dow Dives 878 Points on Trump's China Warning: Stock Market TodayThe main indexes erased early gains after President Trump said China is becoming "hostile" and threatened to cancel a meeting with President Xi.
-
I'm a Real Estate Investing Pro: This 1031 Exchange Strategy Can Triple Your Cash FlowSavvy investors can use 1031 exchanges to unlock value by moving capital across markets in a play called geographic arbitrage. These tax implications can make or break the strategy.
-
I'm an Insurance Pro: Everyone Needs to Prepare for Earthquakes, Even if You Don't Live Near a Fault LineHere are my tips for what to do before, during and after an earthquake. The more prepared you are, the more you'll be able to keep your wits about you if it happens.
-
Stocks Retreat as Shutdown Continues: Stock Market TodayWhile the main indexes closed lower today, Delta and PepsiCo gained ground on encouraging earnings reports.
