Broadcom recently announced a 10-for-1 stock split, which will take effect in July. Although the split won’t make shares more affordable, it will make options cheaper to trade and help the company pay stock-based compensation. Despite this, investors should focus on four reasons why Broadcom remains an attractive long-term investment.
First, Broadcom’s expansion strategy is bold, as it has made several significant acquisitions in recent years to become one of the world’s largest chip and infrastructure software providers. It aims to diversify its revenue sources and reduce its dependence on the semiconductor sector.
Second, Broadcom’s AI chip sales are soaring, driven by the growing demand for generative AI applications. This growth offsets weakness in other markets and positions Broadcom as a key player in the AI market.
Third, Broadcom has consistently shown growth in adjusted revenues, gross margins, and earnings per share over the years. Analysts expect this trend to continue into the future, with strong growth projected for fiscal 2024 and 2025.
Lastly, Broadcom’s shares trade at reasonable valuations considering its recent performance and growth potential. While some may prefer NVIDIA for its faster growth, Broadcom offers a more balanced and diversified play in the tech sector at a reasonable price.
Investors should focus on Broadcom’s core strengths rather than short-term noise, as the company is poised for further growth in the coming years. Whether buying before or after the stock split, the long-term prospects for Broadcom remain strong.
Article Source
https://www.fool.com/investing/2024/06/23/stock-split-reasons-to-buy-broadcom-stock/
