Is Broadcom (NASDAQ:AVGO) in big trouble? You might jump to that conclusion if you obsess over stock-price charts, but we encourage you to stay calm and be a big-picture thinker. Broadcom is in good shape, financially speaking, so Broadcom stock deserves a confident “B” grade.
Broadcom’s VMware cloud-foundation software is world-renowned and generates ongoing revenue for the company. Yet, when broader-market worries arise, investors may overlook Broadcom’s strengths and just dump all of their technology stocks.
That’s the time to be opportunistic, not fearful. Remember, the chance to invest in a successful, high-growth tech business like Broadcom at a discount doesn’t happen every day, or even every quarter.
Don’t Forget What the Broadcom CFO Said
Sometimes, it feels like the market has an almost nonexistent attention span. Or maybe, investors are suffering from short-term memory loss.
It really wasn’t very long ago that Broadcom Chief Financial Officer Kirsten Spears revealed some impressive stats. First of all, she disclosed that Broadcom’s second-quarter fiscal 2024 consolidated revenue grew 43% year over year to $12.5 billion.
Spears also reported that Broadcom’s adjusted EBITDA increased by 31% YOY to $7.4 billion. Additionally, the company’s free cash flow, excluding restructuring and integration in the quarter, grew 18% YOY to $5.3 billion.
Looking ahead, Broadcom expects its full-year fiscal 2024 revenue to grow 42% YOY to approximately $51 billion. Clearly, Broadcom is in growth mode even if the market is too distracted to recognize or remember this.
Too Much Fixation on the Rotation
Even as Broadcom continues to develop its VMware products and guide for robust revenue growth, the market is fixated on external issues. None of the issues are Broadcom’s fault, and calmer heads will likely prevail in the long run.
Some investors are jittery because they’re worried about an AI “bubble.” Yet, Broadcom demonstrated undeniable revenue growth from its AI-compatible products.
As the old saying goes, the numbers don’t lie. Broadcom CEO Hock Tan reported, “Revenue from our AI products was a record $3.1 billion” in Q2 of FY2024. That’s not a “bubble”; that’s real revenue.
Also, the market recently rotated out of Big Tech stocks because of uncertainty about the trajectory of the U.S. unemployment rate.
One can’t blame Broadcom for this, but it’s an issue to keep in the back of your mind. It’s not a sufficient reason for level-headed investors to panic-sell Broadcom stock, though.
Broadcom Stock: Haste Could Cost You Dearly
Macroeconomic concerns shouldn’t be ignored, and the market’s rotation out of technology stocks could persist for a while. Consequently, it would be hasty to take a massive position in Broadcom shares now.
Broadcom’s results show that the company is in growth mode. So, it would also be hasty to sell the Broadcom shares you might have now.
Broadcom stock earns a “B” grade, and it’s fine if you want to take or add to a small portfolio position. Stay informed, don’t move too quickly and, as always, let data be your guide instead of fear.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.
On the date of publication, the responsible editor did not have (either directly or indirectly) and positions in the securities mentioned in this article.
