Broadcom: Turning the Mag 7 Into 8 Trillion-Dollar Tech Giants
Broadcom (NASDAQ: AVGO) is on the verge of turning the Magnificent Seven into Eight. The Mag Seven are the top U.S. stocks by market cap, all tech names, and the only United States stocks with trillion-dollar market caps. Broadcom was about 17% below that target going into the FQ1 2025 earnings report; coming out, the stock price surge went off the charts, rising nearly 17% to tickle the critical level and set a new all-time high. Because the results are driven by fundamental strengths, including high demand for AI-related products and AI's budding, multi-generational upgrade cycle drive, Broadcom stock will likely continue moving higher, enter the trillion-dollar market cap zone, and turn the Mag Seven into Eight.
Broadcom: An Intelligent Play on Artificial Intelligence
Broadcom reported mixed results; however, the bar was set high, revenue growth accelerated, and it topped 50%, so the expected top-line figure is much stronger than it may appear. The company’s growth is driven by strength in both segments, led by a 196% increase in Infrastructure Software. Its software products are critical to building and scaling AI. They are used by the leading hyperscalers and the businesses that use them, including Apple (NASDAQ: AAPL), Google (NASDAQ: GOOGL), and Meta Platforms (NASDAQ: META). Semiconductors, the largest business segment, grew by 12%.
Margin is another area of strength.
Broadcom sustained its margin and drove better-than-expected cash flow despite the impact of restructuring, allowing the board to increase the dividend significantly. Cash flow came in at $5.604 billion, up from the prior year, with $5.482 billion in free cash flow or about 39% of the revenue. The net result is adjusted earnings of $1.42, up 28% year over year and $0.03 better than MarketBeat’s reported consensus.
The company's guidance is also good. It issued strong guidance for Q1, forecasting 22% year-over-year growth in addition to the 34% posted last year and a wider margin. The EBITDA margin is expected to widen sequentially by 100 basis points and 600 compared to the previous year, driving leveraged cash flow and FCF gains. The guidance is also above the consensus forecasts, leading analysts to raise their results and stock price estimates.
Broadcom (NASDAQ: AVGO) is on the verge of turning the Magnificent Seven into Eight. The Mag Seven are the top U.S. stocks by market cap, all tech names, and the only United States stocks with trillion-dollar market caps. Broadcom was about 17% below that target going into the FQ1 2025 earnings report; coming out, the stock price surge went off the charts, rising nearly 17% to tickle the critical level and set a new all-time high. Because the results are driven by fundamental strengths, including high demand for AI-related products and AI's budding, multi-generational upgrade cycle drive, Broadcom stock will likely continue moving higher, enter the trillion-dollar market cap zone, and turn the Mag Seven into Eight.
Broadcom: An Intelligent Play on Artificial Intelligence
Broadcom reported mixed results; however, the bar was set high, revenue growth accelerated, and it topped 50%, so the expected top-line figure is much stronger than it may appear. The company’s growth is driven by strength in both segments, led by a 196% increase in Infrastructure Software. Its software products are critical to building and scaling AI. They are used by the leading hyperscalers and the businesses that use them, including Apple (NASDAQ: AAPL), Google (NASDAQ: GOOGL), and Meta Platforms (NASDAQ: META). Semiconductors, the largest business segment, grew by 12%.
Margin is another area of strength.
Broadcom sustained its margin and drove better-than-expected cash flow despite the impact of restructuring, allowing the board to increase the dividend significantly. Cash flow came in at $5.604 billion, up from the prior year, with $5.482 billion in free cash flow or about 39% of the revenue. The net result is adjusted earnings of $1.42, up 28% year over year and $0.03 better than MarketBeat’s reported consensus.
The company's guidance is also good. It issued strong guidance for Q1, forecasting 22% year-over-year growth in addition to the 34% posted last year and a wider margin. The EBITDA margin is expected to widen sequentially by 100 basis points and 600 compared to the previous year, driving leveraged cash flow and FCF gains. The guidance is also above the consensus forecasts, leading analysts to raise their results and stock price estimates.