Bull of the Day: Broadcom (AVGO)

Broadcom Company OverviewZacks Rank #1 (Strong Buy) stock Broadcom (AVGO) manufactures and sells semiconductors that are used in a range of technology products, such as smartphones, AI data centers, and the automotive industry, to name a few. Semiconductor solutions accounted for roughly 60% of 2024 revenues.AI-Related CapEX Remains StrongWhile the names of companies may come and go, and each moment in history on Wall Street is unique, every bull cycle has an underlying theme. That is, one growth industry that drives so much growth that it can lead the market up and down. For instance, in the late 19th and early 20th century, the key industry was railroads. The innovation was so novel and game-changing that it produced the most growth, profits, and speculation. The late 1990s saw the internet craze lead the US stock market higher and ultimately lower.Today, that industry is artificial intelligence. Grand View Research predicts that the global AI market will balloon to more than $1.8 trillion over the next five years, racking up a compound annual growth rate of ~35%. CapEx, or Capital Expenditure spending mostly from America’s cash-rich big tech companies, is the key to determining AI growth and, thus, Broadcom’s potential earnings growth. As earnings season hits its stride, Broadcom and other big tech companies are receiving welcome news on the CAPEX front:·       Alphabet (GOOGL) reiterated its gargantuan CapEx guidance.·       Meta Platforms (META) hiked their already massive CapEX projections.·       Microsoft (MSFT) reiterated CapEx guidance.Semiconductor RestrictionsRestrictions on sending semiconductors overseas are an equally big threat to the semiconductor business. Yesterday, the Trump White House eased some of those concerns when it said it is considering easing restrictions after Nvidia (NVDA) and other semiconductor juggernauts pushed for rule changes.AVGO: Expect Big Earnings GrowthBroadcom benefits from robust demand for its networking products and custom AI accelerators (XPUs). Last year, AI revenues bolted 220% year-over-year. Meanwhile, Zacks Consensus Estimates suggest that AVGO will grow 42.73% this quarter, and 35.52% for full-year 2025.Image Source: Zacks Investment ResearchBroadcom Announces Massive Buyback ProgramDuring last quarter’s earnings conference call, AVGO management announced a massive $10 billion buyback. Share buybacks are bullish because they reduce the supply of stock available in the market, often leading to higher share prices.AVGO is a Perennial EPS WinnerAVGO has not missed Wall Street estimates in at least 5 years.Image Source: Zacks Investment ResearchBottom LineFueled by explosive AI growth, strong CapEx spending from tech giants, and a gigantic share buyback program, Broadcom is well-positioned to capitalize on the AI revolution.5 Stocks Set to DoubleEach was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2024. While not all picks can be winners, previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Microsoft Corporation (MSFT): Free Stock Analysis Report NVIDIA Corporation (NVDA): Free Stock Analysis Report Broadcom Inc. (AVGO): Free Stock Analysis Report Alphabet Inc. (GOOGL): Free Stock Analysis Report Meta Platforms, Inc. (META): 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