Broadcom: Focus On Organic Revenue Growth

  • The stock price is showing consolidation after a 20% surge following strong Q2 FY2024 earnings, due to significant expansion in valuation multiples.
  • The company grew only 12% YoY in Q2 FY2024 and 11% YoY in Q1 FY2024 in organic total revenue, excluding VMware’s revenue contribution, up from high single-digit growth in FY2023.
  • Revenue growth for AVGO is largely driven by VMware, with impressive Infrastructure Software growth and potential for nearly 100% YoY growth in 1Q FY2025E.
  • AI-related revenue has increased 280% for Broadcom, but the segment remains at 25% of its total revenue in the last quarter.
  • The company’s net income margin has been declining, with mid-single-digit non-GAAP EPS growth over the past three quarters.




Investment Thesis

Broadcom Inc. (NASDAQ:AVGO) recently surged 20%, driven largely by a strong Q2 FY2024 earnings report. Like other semiconductor stocks, AVGO has seen significant price jumps due to the GenAI tailwinds, which is driving tremendous demand for Ethernet solutions and custom