In 5 Years, What Can We Expect From Broadcom’s Stock? | The Motley Fool

Broadcom (AVGO -4.38%), a tech hardware company, has seen its shares soar over 500% in the last five years due to its involvement in artificial intelligence (AI) related demand. As a result of a 2016 merger between Avago Technologies and Broadcom Corporation, the company has positioned itself as a leader in semiconductor products, enterprise software, and data center equipment. Unlike Nvidia, which focuses on high-end GPU technology, Broadcom specializes in custom chip manufacturing, particularly in Application-specific integrated circuits (ASICs) tailored for specific clients like Google and Meta Platforms.

The company’s recent second quarter results showed a 43% year-over-year revenue increase to $12.49 million, driven by strong demand for data center hardware and boosted by its acquisition of VMware. While Broadcom is not solely focused on AI, its diverse technology interests provide a level of security and protection against potential fluctuations in AI chip demand. With an EBITDA of $7.43 billion, representing 59% of revenue, Broadcom’s financials are impressive and solid.

In anticipation of a massive 10-for-1 stock split scheduled for July 15, Broadcom has caught the attention of retail investors. Despite the stock split not changing the company’s market capitalization or valuation, it signals positive movement for the company. With a forward P/E ratio of 38, Broadcom appears to be a more affordable option compared to Nvidia, which has a projected P/E ratio of 52.

Overall, Broadcom seems like a solid investment choice for those looking to capitalize on the long-term growth of the AI industry. Its steady growth, diversification in technology sectors, and more reasonable valuation in comparison to competitors like Nvidia make it a promising option for investors.

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https://www.fool.com/investing/2024/06/21/where-will-broadcom-stock-be-in-5-years/