Broadcom Stock: Potential Sparks Behind the Next Leg Up

Broadcom (AVGO) has demonstrated remarkable surges, with over 30% rallies in under two months occurring 16 times, including notable bursts in 2010 and 2024. Additionally, it has experienced more than 50% gains in brief periods, highlighting its potential for rapid appreciation. If similar conditions arise, Broadcom could again see swift, substantial advances that offer significant opportunities for investors.

Triggers That Could Boost The Stock

• AI Custom Chips: OpenAI $10B deal; Q4 FY25 AI revenue guidance $6.2B, up 66% YoY.
• VMware Growth: Q3 FY25 software revenue $6.8B, up 17% YoY; 67% adjusted EBITDA.
• AI Networking: Thor Ultra 800G Ethernet chips; Q3 semiconductor revenue $9.17B.

Single stock can be risky, but there is a huge value to a broader diversified approach we take with Trefis High Quality Portfolio. Let us ask you this: Over the last 5 years, which index do you think the Trefis High Quality Portfolio outperformed – the S&P 500, S&P 1500 Equal Weighted, or both? The answer might surprise you. See how our advisory framework helps stack the odds in your favor.

How Do Financials Look Right Now

It certainly helps if the fundamentals check out. For details on AVGO Read Buy or Sell AVGO Stock. Below are a few numbers that matter.

• Revenue Growth: 28.0% LTM and 24.0% last 3-year average.
• Cash Generation: Nearly 41.6% free cash flow margin and 39.0% operating margin LTM.
• Valuation: Broadcom stock trades at a P/E multiple of 88.2
• Opportunity vs S&P: Compared to S&P, you get higher valuation, higher revenue growth, and better margins

*LTM: Last Twelve Months

But How Does The Stock Do In Bad Times?

When looking at risk, it’s useful to see how AVGO holds up during big market sell-offs. In 2018, the stock dropped about 27% from peak to trough. The Covid pandemic hit it harder, with a nearly 48% plunge. During the inflation shock, the dip was around 35%. Even with strong fundamentals, AVGO isn’t immune to sharp declines when the broader market turns south. Good quality can cushion the fall, but downturns still sting.

But the risk is not limited to major market crashes. Stocks fall even when markets are good – think events like earnings, business updates, and outlook changes. Read AVGO Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.

The Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.