Broadcom (AVGO) Q2 earnings exceeded expectations, strategic layout in the AI wave

1. Latest Quarterly Earnings Report

On June 13 (Beijing Time), Broadcom (AVGO) released its Q2 earnings report. $Broadcom(AVGO.US)

Broadcom's performance showed that in Q2 2024, profits, revenue, and EPS all exceeded expectations, with revenue up 37% YoY. Full-year sales are projected to reach $51 billion. Additionally, the company announced a 10:1 stock split, effective July 15, further boosting market confidence. AVGO's stock surged over 14% in after-hours trading, reflecting investor approval of its performance and future growth.

Broadcom's four key AI segments—data centers, AI accelerators & ASICs, networking components, and AI Ethernet—all saw significant growth. AI Ethernet alone is expected to account for 35% of semiconductor revenue in 2024.

2. Broadcom's Long-Term Strategy & Goals

1. AI-Driven Growth

With advancing AI technology, demand for Broadcom's AI products has skyrocketed. Partnerships with hyperscalers like Google to develop custom AI accelerators and chips have fueled data center solutions. In 2023, AI ASICs and networking solutions contributed 15% of semiconductor revenue, projected to exceed 35% in 2024.

2. 5G Market Potential

5G adoption presents new opportunities. By 2028, 5G smartphones will dominate 97% of the market, benefiting Broadcom as a key 5G chip supplier. The $200B 5G market in 2023 is expected to grow to $600B by 2028.

3. Strategic Acquisitions

Acquisitions like CA Technologies, Symantec's enterprise security, and VMware have expanded Broadcom's tech portfolio and market leadership in AI/data centers.

4. 2024 Outlook

Broadcom raised its AI chip revenue forecast by 10%, projecting $11B+ in AI product revenue for FY2024, exceeding analyst expectations. As AI and 5G converge, Broadcom aims to maintain its tech leadership and shareholder value.

3. Stock Buybacks & Analyst Ratings

1. AVGO Returns $2.4B to Shareholders

In Q2, AVGO returned $2.443B to shareholders. Dividends totaled $5.25 per share, with no buybacks—a surprise given its recent buyback history.

2. Is AVGO a Buy?

Wall Street consensus rates AVGO a Strong Buy (18 Buy, 2 Hold, 0 Sell ratings). After a 78% annual gain, the average price target is $1,590.42 (6.97% upside).