Broadcom Still Looking At Robust Demand Even As Tech Investor Enthusiasm Cools

 

Given Broadcom’s (NASDAQ:AVGO) focus on margins and cash flows over growth, it’s never been altogether surprising to me that these shares often lag when the chip sector is very much in favor with the Street but outperform when the bloom comes off that particular rose. And so it seems to be today, with the shares having outperformed the SOX index by more than 16% since my last update on the company as semiconductor valuations come off their highs.

I don’t dismiss the risk that Broadcom shares can get caught up in broader declines for tech stocks (or chip stocks more specifically), but I believe this company is very well-positioned operationally for the next two years, given strong demand in networking (enterprise and service provider), broadband/connectivity, wireless, and data center storage. From here I can see upside toward the $650’s, and I believe the shares are priced for respectable long-term annualized total returns in the high single-digits.

 

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Broadcom Still Looking At Robust Demand Even As Tech Investor Enthusiasm Cools