Broadcom Poised for Robust Growth on AI Infrastructure Boom Despite Consumer Headwinds
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Broadcom reported strong 34% y/y revenue growth in Q1'24 across data centers and hyperscalers as AI infrastructure is adopted. Management expects $50B revenue in eFY24.
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Strength will be driven by corporate AI adoption and infrastructure build outs. Retail segment expected to be flat or down due to consumer inflationary pressures.
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AI semiconductors and networking equipment projected to have high growth. Other segments like wireless, storage, and broadband expected to be flat or decline.
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VMware acquisition contributing significantly to infrastructure software sales growth. Partnership with Nvidia seen as positive for AI adoption.
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Valuation elevated at 27.35x EV/EBITDA but expected to be justified by central role in next generation AI infrastructure. BUY rating with $1,283 price target.