In September 2024, Broadcom (AVGO, Financial) showcased robust growth prospects through custom silicon and heightened network demand, supporting impressive revenue expansion and strong backlog orders. Despite increased debt from acquiring VMware, Broadcom's commitment to shareholder returns and ample free cash flow made it a compelling high-growth investment. Analysts reiterated a buy rating, and the stock delivered a 38.3% return following impressive Q4 2024 earnings.
The optimism stems from sustained demand for generative AI, with TSMC reporting strong revenues in October and November 2024. Broadcom's leadership in custom ASICs is reinforced by potential partnerships with OpenAI and Apple (AAPL). Analysts predict accelerated revenue and profit growth through 2027, driven by custom ASIC opportunities and network demand.
Broadcom's forward P/E valuation is attractive at 36.00x, despite being higher than historical averages, as it remains reasonable compared to peers like NVIDIA and AMD. Analysts maintain a buy rating, suggesting entry at $180/$190 for long-term growth potential.
