AVGO vs. OKTA: Which Enterprise Security Software Stock is a Buy?

Broadcom AVGO and Okta OKTA are key providers of security software solutions for enterprises. AVGO offers Endpoint Security (Symantec and Carbon Black), Network Security, Information Security, Application Security (Carbon Black) and Identity Security solutions. Meanwhile, OKTA offers cloud-based identity solutions that allow customers to integrate with nearly any application, service or cloud that they choose through its secure, reliable and scalable platforms: Okta Platform and Auth0 Platform.According to Gartner’s latest data, enterprise spending on cybersecurity software and network security will grow 14% in 2025 to $118.5 billion, driven by strong demand for Generative AI (Gen AI) and cloud adoption. IDC expects global cybersecurity spending to grow 12.2% year over year in 2025, driven by increasing complexity and frequency of cyberattacks due to growing deployment of Gen AI and AI, with spending on security software to grow 14.4% year over year. The bullish projections offer significant growth opportunities for both Broadcom and Okta.Both companies are benefiting from strong demand for AI infrastructure, data center build-outs and an increasing threat landscape. Shares of Broadcom and Okta have appreciated 22.2% and 21.1% year to date, respectively.AVGO and OKTA Stock’s Performance Image Source: Zacks Investment Research So, Broadcom or Okta, which is leading the charge? Let’s find out.AVGO Rides on Strong Infrastructure PortfolioBroadcom’s security offerings are a part of its broader Infrastructure Software solution that accounted for 44% of revenues in the second quarter of fiscal 2025. Infrastructure software revenues jumped 25% year over year to $6.6 billion, bolstered by the successful conversion of enterprise customers to the full VMware Cloud Foundation software stack subscription. AVGO expects infrastructure software revenues to be approximately $6.7 billion, up 16% year over year, in the third quarter of fiscal 2025.Broadcom’s focus on delivering AI-powered, proactive security to stay ahead of evolving cyber threats has been noteworthy. In March, AVGO introduced updates to VMware vDefend, improving security planning, lifecycle management, and scalability for VMware Cloud Foundation with new tools like the Security Segmentation Assessment and Report, optimized micro-segmentation, and advanced Network Detection and Response, all aimed at improving threat prevention and operational efficiency. In April, Broadcom introduced Incident Prediction, which extends the security feature of Adaptive Protection, a unique capability of Symantec Endpoint Security Complete (SES-C).Apart from Infrastructure solutions, strong demand for Broadcom’s application-specific integrated chips (ASICs), designed to support AI and machine learning and make these tasks more efficient, aids top-line growth. Custom AI accelerators (XPUs), which are a type of ASICs, are necessary to train Gen AI models, and they require complex integration of compute, memory, and I/O capabilities to achieve the necessary performance at lower power consumption and cost.Okta Benefits From Innovative PortfolioOkta’s offerings include Okta AI, a suite of AI-powered capabilities embedded across several products, which empowers organizations to harness AI to build better experiences and protect against cyberattacks. The company benefits from strong demand for its new products, including Identity Governance, Privileged Access, Device Access, Fine Grained Authorization, Identity Security Posture Management, and Identity Threat Protection with Okta AI.Okta is expanding its security portfolio with the launch of a new protocol, Cross App Access, which helps in securing AI agents. The company is working with ISVs in launching Cross App Access that will enable ISVs’ enterprise customers to better connect their AI tools to other apps and data. End users ultimately benefit as the latest protocol removes repetitive authorization consent screens and manages agent access for better security and compliance.The company’s focus on protecting non-human identities (NHIs) and developers building secure agents is noteworthy. NHIs include service accounts, shared accounts, machines and tokens, and often operate outside traditional identity governance frameworks and can leave organizations vulnerable to security risks. Identity Security Posture Management and Okta Privileged Access help in solving the vulnerabilities related to NHIs.AVGO’s Earnings Estimate Revision Positive, OKTA’s SteadyThe Zacks Consensus Estimate for AVGO’s fiscal 2025 earnings is pegged at $6.64 per share, up by a penny over the past 30 days, indicating a 36.34% increase over fiscal 2024’s reported figure. Broadcom Inc. Price and Consensus Broadcom Inc. price-consensus-chart | Broadcom Inc. Quote The consensus mark for Okta’s fiscal 2026 earnings has been steady $3.28 per share over the past 30 days, suggesting 16.73% growth over fiscal 2025. Okta, Inc. Price and Consensus Okta, Inc. price-consensus-chart | Okta, Inc. Quote Both AVGO’s and Okta’s earnings beat the Zacks Consensus Estimate in all the trailing four quarters. OKTA’s average surprise of 13.53% is significantly better than AVGO’s surprise of 3.2%, reflecting a good quality of earnings beat on a consistent basis.Valuation: OKTA is Cheaper Than AVGOIn terms of forward 12-month Price/Sales, Broadcom shares are trading at 18.55X, significantly higher than Okta’s 5.6X.Both Okta and Broadcom are overvalued, as suggested by the Value Score of D and Value Score of F.OKTA and AVGO Valuation Image Source: Zacks Investment Research Okta is a Better Buy Than BroadcomBroadcom’s expanding AI portfolio, along with a rich partner base, is a key catalyst. AVGO expects third-quarter fiscal 2025 AI revenues to jump 60% year over year to $5.1 billion on these factors. However, AVGO’s guidance reflects sluggishness in server storage, wireless and industrial businesses. Gross margin is expected to decline roughly 130 basis points sequentially, reflecting a higher mix of XPUs with AI revenues.However, Okta’s innovative portfolio, along with a strong partner base, is noteworthy. The company has more than 7,000 integrations with cloud, mobile, and web applications and IT infrastructure providers as of April 30, 2025. OKTA exited first-quarter fiscal 2026 with roughly 20,000 customers and $4.084 billion in remaining performance obligations, reflecting strong growth prospects for subscription revenues.Okta currently carries a Zacks Rank #2 (Buy), making it a better buy compared with Broadcom, which has a Zacks Rank #3 (Hold). 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(OKTA): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks