Broadcom (AVGO) Stock Surges as Latest Winner in AI Frenzy


  • Broadcom (AVGO) stock is surging sharply after the company reported strong-than-expected fiscal Q2 results and announced a stock split.  
  • The chipmaker now expects to generate revenue of $11 billion from AI chips this year, up from $10 billion previously.
  • Heading into today, AVGO stock had jumped 34% in 2024. 
AVGO stock - Broadcom (AVGO) Stock Surges as Latest Winner in AI Frenzy

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Broadcom (NASDAQ:AVGO) stock is climbing about 15% to a new all-time high and trending on social media and business news websites. This comes after the semiconductor maker reported that it expects its revenue from artificial intelligence (AI) chips to come in above its previous outlook. The tech giant also announced a 10-for-1 split of AVGO stock.

Broadcom’s Beat-and-Raise Results

The chipmaker’s top line soared 43% versus the same period a year earlier to $12.49 billion. Analysts, on average, had expected its sales to come in at $12.02 billion. The tech giant’s operating income climbed to $2.965 billion, up from $2.08 billion in the second quarter of fiscal 2023.

On the bottom line, Broadcom generated earnings per share of $10.96, slightly above analysts’ mean estimate of $10.84. In Q2, the firm generated revenue of $3.1 billion from its AI-linked offerings.

On the guidance front, the firm now expects to generate revenue of $11 billion from AI chips this year, up from its previous outlook of $10 billion.

The company’s chips are used to facilitate the transfer of data, and AI systems utilize tremendous amounts of data. Many observers believe that the company provides chips for both Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) and Meta (NASDAQ:META).

The AVGO Stock Split and Its Premium Valuation

Emulating Nvidia (NASDAQ:NVDA), Broadcom announced that it would carry out a 10-for-1 stock split. The split, which the firm is executing to make AVGO stock more affordable for retail investors, is expected to take effect on July 15.

In the wake of today’s rally of AVGO stock, the shares have a forward price-to-earnings ratio of 30 times. That’s significantly higher than the S&P 500’s average price-earnings ratio of 24.8 times but well below Nvidia’s current forward price-earnings ratio of 48.3 times.

Heading into today, Broadcom had risen 6% in the previous month and 34% in 2024.

On the date of publication, Larry Ramer did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

Larry Ramer has conducted research and written articles on U.S. stocks for 15 years. He has been employed by The Fly and Israel’s largest business newspaper, Globes. Larry began writing columns for InvestorPlace in 2015. Among his highly successful, contrarian picks have been SMCI, INTC, and MGM. You can reach him on Stocktwits at @larryramer.

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