Is Broadcom Just Getting Started?
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- Опубліковано 28 чер 2024
- AVGO stock has been on a tear, rising 104% in the past year versus a NASDAQ return of just 34%. However, writers at Silicon Angle seem to think Broadcom stock's massive rally is just getting started. Could Broadcom stock be the next NVIDIA? Trick question. The next NVIDIA is NVIDIA. However, the "other" NVIDIA may just be Broadcom, the only other company that operates in internal and scaled networking across switches. Broadcom and NVIDIA are essentially a duopoly in this space.
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CHAPTERS:
00:00 Intro
01:08 AI revenue
2:04 Broadcom (AVGO)
04:20 Broadcom revenue segments
05:09 What Broadcom does
07:38 Broadcom's route to AI dominance
10:16 Concluding thoughts
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I think Hock Tan said it the best on the last earnings call "There is only one Broadcom". Let's see where Broadcom is after the upcoming split, where the shares will be affordable for every day investors. For being the 9th largest US company not many people talk about Broadcom.
There is only one Apple/Tesla/Microsoft etc. Not overly compelling statement. In today's era of fractional share ownership, splits do not make shares more affordable. There are some academic findings around share performance and splits that's interesting. Large companies are very visible to institutional investors, the people that matter.
@@Nanalyze Apple is smart because they are making everyone upgrade their iPhones and ipads for AI, but this will benefit Broadcom.
Analysts are saying Broadcom target is $2000 so plenty of upside left. Good luck to everyone holding.
Analysts price targets and $5 might get you a coffee at Starbucks.
@@Nanalyze I really hope you bought shares 3 weeks ago when you made your presentation. If not good luck with your other holdings.
@@glennshoemake4200 Ah yes. The old 4-week performance measurement.
"The next Nvidia" oof.
I remember the years of articles putting "The next Apple" and don't even recall what happened to those prodigal stocks anymore.
Great video as always
Thank you for the feedback!
Thank you for your excellent content. I’m considering a monthly subscription when TMF subscription ends. Always wanted to own Broadcom, but always highly valued. Acquired shares as a Long time VMW shareholder. Glad to keep these shares as a strong dividend grower and excellent ROIC.
Great to hear you're considering a monthly subscription! :) Always nice to get into a company you want to own via the acquisition of another company you hold.
I agree near term growth & valuation may be something to be wary of but you can’t argue with those balance sheets or financials…30% profit margins, almost 50% FCF margins, $26 of earnings per share and $40 of free cash flow per share, as well their ROE and ROI show they’ve done excellent work of increasing shareholder value with their use of cash flows. I rather a company stay in the background and grow quietly through strategic M&A rather than the case of Nvidia having the CEO go on AI world tours whilst having the market hang on every earnings call (not saying there’s anything wrong with Nvidia but the expectations are way way too high for any one company to continue meeting and beating). Broadcom reminds me of Danaher, it’s hard to beat conglomerates that have vertically integrated diversified business segments that are all extremely valuable companies on their own operating as subsidiaries. Kind of like what Berkshire does.
The video wasn't about AVGO's broader investment thesis, it was about the extent to which AVGO says they're benefiting from AI vs what's actually happening. Yes, the video stated that their financials were strong. Agreed. Your last sentence mimics our thoughts on conglomerates that have lots of subsidiaries across various industry verticals, each leading in what they do. Parker Hannifin is the same way, recently covered here: ua-cam.com/video/kzbCIl0Z0Eo/v-deo.html
It's history is very dark not just that the lack of innovation is negative for the company.
Can you elaborate more on that please?
The time to by Broadcom was 20 years ago
Or NVIDIA
or Apple, or Amazon, or any other company 😂 what a statement...
WELL explained thank you!!!! I do also believe it is too early to label Broadcom as the next NVIDIA. We surely hope so !
btw just subscribed !!
Broadcom is an interesting company in its own right.
Thanks!
Thank you so much for the support! It means a lot.
The other Nvidia may be Qualcomm. They compete where Nvidia isn't.
Anything more specific than that? We may look to cover Qualcomm in the future in the context of other themes as well.
SMH is good for those who can't handle Nvidia's volatility.
@@earlwilliams5473 We covered SMH here: ua-cam.com/video/5XNKnaTBFFA/v-deo.html
After the split I'm loading up plus $21 dividend
Thank you for letting us know. That's completely based.
I was buying AVGO when it was ~470$, I still hold it but reduced my holding by 40% as it seems extremely overvalued right now. I would think that its probably fairly valued at around 650$-800$.
What valuation ratios are you using to arrive at those price targets?
@@Nanalyze 12% FCF growth according to analysts estimates, 2% shares growth rate which is average for couple last years, discout rate of 12%, and depending whether I use historical P/FCF of 15 or 20 you get 650$-800$
If I go based on earnings analysts estimate about 20% growth and with that I get about 900$. Still nowhere near where it is now.
Bravo! We always see people throwing up price targets without doing the homework. You are one of the good ones. :) Thank you for sharing!
@@Nanalyze Thank you :)
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We love you too!
Hmm… Question might be who could they buy that will push their semiconductor revenue by 35%. 🤔
Right now they're telling us AI growth is happening like mad. We don't see that growth translated to the segment it is said to belong to. That's the problem. Acquiring more capabilities doesn't address this concern, but it is a different question that wasn't discussed in this video and an interesting one in its own right when looking at the company more holistically.
Isn’t ANET also in this game for datacenter networking?
One would think that SiliconANGLE wouldn't have cited a duopoly without considering all the participants.
There are no CSCO or ANET products without AVGO
29 Seconds into this video. Before I move forward. My guess is: ARM. Let's see if we are in agreement.
ARM was founded around the same time as Nvidia but doesn't make anywhere near the profits. ARM is far from Nvidia.
We covered ARM here: www.nanalyze.com/2023/08/arm-ipo-under-the-hood/
@@Nanalyze Would love to hear an update or not much changed since this one? I have a special admiration for ARM through my career (not at ARM) but in the same industry.
@@JustStartingOut-nt8ve ARM certainly is unique with those crazy high gross margins. We check in with companies about once a year.
I disagree that if you’re an AI company you should be showing AI growth. There could be two kids in a basement creating the next AI Google or AI UA-cam. AI is still very new.
Would respectfully disagree. AI has been around for quite a while now. We've been covering it for about eight years and only recently has it become a household name.
If y'all can't make up your mind just go with SMH an call it a day😒
We covered SMH here: ua-cam.com/video/5XNKnaTBFFA/v-deo.html
No interested to wait another 20years for a boom.😂
Boom is already here
Semiconductors are flat due to iPhones.
So iPhones are more of a key driver than AI then. At least for now. Interesting.
Thanks!
That's very kind of you, thank you! Your support truly means a lot.