With artificial intelligence (AI) front and center, it’s no wonder that semiconductor giant Broadcom (NASDAQ:AVGO) has been surging lately. The company specializes in integrated circuits (ICs) and other technologies critical for the advanced needs of AI applications. However, this supreme relevance has also led to a blisteringly high price, causing accessibility issues with AVGO stock. Therefore, the Broadcom stock split may spark more demand from retail investors.
Of course, the mere price of a security is not a reliable indicator of its fundamental value. However, when shares reach stratospheric levels, it becomes difficult for retail investors to participate. Not all brokerages offer fractional equity ownership. Plus, selling fractional shares encounters more friction than exiting fully owned equity. At around $1,700 per share, AVGO isn’t a realistic proposition for many investors beginning their journey.
As such, the Broadcom stock split carries an optimistic framework as it lowers the financial threshold for everyday market participants. Last month, when the semiconductor firm disclosed its fiscal second-quarter earnings report, Broadcom also announced a 10-for-1 forward split of AVGO. Indeed, management announced that the move “will make ownership of Broadcom common stock more accessible to investors and employees.”
Investors Seeking Participation in the Broadcom Stock Split Should Get Ready
On paper, the Broadcom stock split will occur on July 12. However, investors who wish to participate in the split must be a shareholder by July 11. Anyone holding AVGO stock as of the July 11 close will receive an additional nine shares for every one share held.
To clarify, participation in the stock split itself does not mean an increase in wealth. While shareholders will receive additional shares, because of the split, the amount of the pie owned will remain the same. However, the benefit of owning AVGO ahead of the move is the enhanced accessibility.
Essentially, people who missed the boat earlier have a chance at possible redemption. Fundamentally, analysts point to generative AI as a key catalyst for growth in the broader tech sector. According to research cited by Bloomberg, the underlying ecosystem could be worth $1.3 trillion by 2032.
Another factor supporting the case of AVGO stock is the forward projection. By the end of this fiscal year, analysts anticipate that EPS could hit $47.55 on revenue of $47.4 billion. In contrast, Broadcom posted EPS of $42.25 on sales of $35.82 billion last year.
Therefore, assuming the projections hold up, AVGO stock could be reasonably priced given the business expansion.
On the date of publication, Josh Enomoto did not have (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 InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
