Broadcom stock price is hovering near its all-time high as its march towards the $1 trillion market cap intensified. AVGO was trading at $180, a few points below the all-time high of $186. It has rallied by almost 1,200% from its lowest level in 2020.
Broadcom business is growing
Broadcom is a giant technology company that provides a wide variety of services mostly to companies like Apple and Samsung.
Its products include the likes of storage adapters, controllers, FBAR filters, wireless LAN, wireless LAN infrastructure, ethernet switches, and custom silicon.
The company has also expanded its solutions through acquisitions over the years. It has become a major a major player in the cybersecurity industry through its $10.7 billion buyout of Symantec.
It also bought VMware, a company that provides key solutions in the cloud computing industry. It is also a big player in enterprise software, where it provides solutions like automation, continuous delivery, network observability, and, API security.
Broadcom’s business has done well in the past few years as its annual revenue has jumped from over $22.5 billion in 2019 to over $45.8 billion in the trailing twelve months. Most of this revenue growth has been because of a combination of organic performance and acquisitions.
Read more: Broadcom stock drop creates buying opportunity: Jim Cramer bullish on AVGO
AVGO earnings ahead
The next important catalyst for the Broadcom stock price will be its earnings, which are expected to come in on Thursday this week.
The most recent results showed that Broadcom’s revenue rose by 47% in the third quarter to $13 billion. Most of this growth was because the revenue included the VMware business, which was not there in the same period last year. Excluding VMware, Broadcom’s revenue was up by about 4%.
Most of the revenue of about $7.2 billion was from its semiconductor solutions. It was followed by its infrastructure software, which brought in over $5.7 billion during the quarter.
Broadcom’s business has done well because of the ongoing demand for artificial intelligence solutions around the world. Indeed, the management believes that its AI revenue will total about $12 billion in the current fiscal quarter, helped by AI data centers and ethernet networking.
Analysts expect that Broadcom’s revenue will be $14.07 billion, a 51% increase from what it made last year. Its guidance for the next quarterly revenue will be $14.59 billion, a 21% YoY increase.
Most importantly, Broadcom will move back to profitability. Its quarterly earnings per share is expected to be $1.39, an increase from the previous $1.11. Also, its annual EPS will be $4.85 followed by $6.19.
There are odds that Broadcom’s business will do better than expected because it has a long record of beating analyst estimates.
Broadcom stock has also done well over the years because of its strong dividend payouts. It has boosted its dividends for 13 consecutive years and has a low payout ratio of 46%.
A key concern among analysts is that Broadcom stock is a bit overvalued. It has a forward P/E ratio of 37, higher than many tech companies. Still, the AVGO stock price may continue doing well as long as it demonstrates strong revenue growth.
Read more: Broadcom stock has turned $1,000 into $9,000 in 4 years: what’s next?
Broadcom stock price analysis
AVGO chart by TradingView
The daily chart shows that the AVGO share price has moved sideways in the past few months. A closer look shows that it has formed a rare upbeat chart pattern known as the ascending triangle.
This pattern is made up of a horizontal line and an ascending trendline. In this case, the horizontal line is at $185.55, while the trendline connects the lowest swings since August 5.
The stock has also moved above the 50-day and 100-day Exponential Moving Averages. Therefore, there is a likelihood that it will form a strong bullish breakout now that the two lines are nearing their confluence level. If this happens, the stock could soon jump to the next point at $200.
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