Why Broadcom Stock Is Still a Buy After Earnings
Broadcom stock is sinking Friday after the chipmaker's outlook fell short, but Wall Street remains bullish. Here's what they're saying.
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
Become a smarter, better informed investor. Subscribe from just $107.88 $24.99, plus get up to 4 Special Issues
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
-
What to Do If You Plan to Make Catch-Up Contributions in 2026Under new rules, you may lose an up-front deduction but gain tax-free income once you retire.
-
If You'd Put $1,000 Into Lowe's Stock 20 Years Ago, Here's What You'd Have TodayLowe's stock has delivered disappointing returns recently, but it's been a great holding for truly patient investors.
-
How to Max Out Your 401(k) in 2026 (New Limits are Higher)In 2026, the maximum contribution limits for 401(k) plans have increased, giving you an excellent shot at maximizing your retirement savings.
-
If You'd Put $1,000 Into Lowe's Stock 20 Years Ago, Here's What You'd Have Today
Lowe's stock has delivered disappointing returns recently, but it's been a great holding for truly patient investors.
-
Don't Trade After-Hours Without Reading ThisAre you a night owl or an early bird with a yen for active trading? Before you transact after-hours, consider these tips and potential traps.
-
8 Practical Ways to Declutter Your Life in 2026: A Retirement 'Non-Resolution' ChecklistHere's how to stop wasting your energy on things that don't enhance your new chapter and focus on the things that do.
-
To Retire Rich, Stop Chasing Huge Returns and Do This Instead, Courtesy of a Financial PlannerSaving a large percentage of your income, minimizing taxes and keeping spending in check can offer a more realistic path to retiring rich.
-
New Year, New Retirement Rules: Here's How You Can Keep Up as the Landscape ChangesFor a successful modern retirement, prepare for a longer life, manage high health care costs and prioritize your social life and purpose.
-
Stocks End Volatile Year on a Down Note: Stock Market TodayAfter nearing bear-market territory in the spring, the main market indexes closed out the year with impressive gains.
-
I’m 45 and I’ve Barely Invested in the Stock Market. I Recently Inherited $50,000. What Should I Do?What should you do with a big inheritance? We asked a financial expert for advice.
-
A Contrarian Approach Pays Off for This Bond FundThe Dodge & Cox Income Fund has outperformed in 2025 thanks to its managers' fearless approach.
