Broadcom (NASDAQ: AVGO) is set to execute a 10 for 1 stock split, with shares trading on a split-adjusted basis starting July 15. The company’s stock has seen a significant surge of 106% over the past year, driven by the growing recognition of its custom silicon’s role in powering artificial intelligence workloads. While Broadcom itself has never split its stock, historical data from other companies suggests that stock splits tend to outperform equity splits, with an average share price appreciation of 25.4% over a 12-month period following the announcement of a split.
Broadcom is a leader in custom AI chips, with a strong presence in network chips and AI accelerators. The company’s recent financial results for the second quarter of fiscal year 2024 beat expectations, driven by demand for AI and VMware products. CEO Hock Tan highlighted the record revenue from AI products and growing adoption of VMware software among enterprises.
Wall Street expects Broadcom to grow its adjusted earnings per share at a 24% annual rate through fiscal 2025, making its current valuation of 40 times adjusted earnings seem reasonable. Melius Research’s Ben Reitzes has mentioned Broadcom as a top choice for investment due to its leadership in the semiconductor industry.
Investors looking to buy Broadcom stock should consider the recommendations of The Motley Fool Stock Advisor, as they have identified the top 10 stocks for investors to buy now, with the potential for outsized returns in the future. While Broadcom may not have made this list, patient investors may find it worth considering a position in the company.
Overall, Broadcom’s upcoming stock split and its strong position in the semiconductor industry make it an attractive option for investors looking to capitalize on the growing demand for AI technology. With a history of outperforming after stock splits, Broadcom could see further upside in the coming months.
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