For Broadcom, Outperformance Is Just Another Day At The Office

In the not-always-rational world of Wall Street, I'm actually a little surprised that the Street hasn't adopted more of an expectation of ongoing beat-and-raise quarters from Broadcom (NASDAQ:AVGO). Then again, given that outlooks are withering at many peer semiconductor companies, I suppose that there's little inclination to look a gift horse in the mouth.

Broadcom shares have rebounded about 20% since my last update on the company (only about a month and a half ago), and while that is better than the performance of the SOX index (up about 16%) and certain select peers (like Marvell (MRVL)), a few like Microchip (MCHP) and NVIDIA (NVDA) have done even better. Pull the comparisons out a year, though, and Broadcom is handily outperforming all of those except Microchip (which it has outperformed, but not by a wide margin).

I still view Broadcom as a core holding. I love the company's leverage to high-end networking/data center demand for connectivity and AI acceleration, as well as leverage to home broadband, and I believe businesses like wireless, storage, and software are still more than worthwhile over the longer term. Roughly 20% below my fair value estimate and priced for a high single-digit long-term annualized return, this remains an attractive idea in my view.

 

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For Broadcom, Outperformance Is Just Another Day At The Office