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."
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.
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
-
Stocks Close Mixed to Start Fed Week: Stock Market TodayNews of an EU-U.S. trade deal was met with muted reaction from market participants who are looking ahead to a jam-packed week.
-
Where to Put Your Savings Before Rate Cuts HitSavers can still access higher savings rates. However, with inflation rising and potential rate cuts looming, you have a tighter window to capitalize.
-
Stocks Close Mixed to Start Fed Week: Stock Market Today
News of an EU-U.S. trade deal was met with muted reaction from market participants who are looking ahead to a jam-packed week.
-
Six Steps to Being Empowered and On Track: An Expert Financial Guide for WomenWhile most female investors feel on track with their financial goals and empowered by managing their investments, many regret not starting sooner. Here's how you can get started and take control of your financial future.
-
Selling Your Business? This Powerful Insurance Option Unlocks Multigenerational WealthPrivate placement life insurance (PPLI) offers almost unbelievable investment flexibility, estate planning and tax advantages. And it's completely legit.
-
I Want to Retire Next Year. Should I Keep My Money In the Stock and Bond Markets?We asked a financial expert to weigh in on where someone getting ready to retire should invest their money.
-
How to Maximize Your Social Security Now That the One Big Beautiful Bill Is LawWhen applying for your Social Security benefits, consider the new enhanced deduction for people age 65 and older, as well as your health, family situation and other financial issues.
-
I'm a Retirement Specialist: This Is How to Keep Your 401(k) on Track Amid Dire News AlertsHistory shows that consistent, disciplined investing far outweighs any attempt at market timing, so focus on long-term growth and tune out the sky-is-falling news headlines.
-
Five Money Moves to Make Before Your First Child Arrives: A Financial GuideI wish I'd known some of these when I was an expectant parent. These important steps include establishing an emergency fund, budgeting for new expenses, securing life insurance and more.
-
What CEOs Say About President Trump and Fed Chair PowellTop opinion-shapers and decision-makers are expressing mixed views on the evolving conflict between the White House and the central bank.
