Broadcom: Don't Hit The Panic Button

The Asian Investor31.09K FollowersFollow5ShareSavePlay(11min)CommentsSummaryBroadcom remains a hold, despite guidance for a minor margin contraction, as AI-driven CapEx and secular demand underpin robust fundamentals.AVGO delivered a standout Q4, with $18.0B revenue (+28% Y/Y) and $7.5B free cash flow (+36% Y/Y), demonstrating positive operating leverage and strong capital return potential.Short-term margin pressure stems from higher sales of lower-margin AI custom silicon and systems, but AVGO's gross margins outperform those of TSMC and AMD.Shares could potentially get cheaper in the short term. I see no reason to change my hold rating for now, as business drivers are fully intact.Investors overreacted to a projected 1 PP margin drop on Friday; AVGO's free cash flow growth and dominant AI infrastructure position support continued optimism. Getty Images A day after Oracle (ORCL) plunged on concerns over the firm's debt-funded CapEx, shares of Broadcom (AVGO) (AVGO:CA) slumped as well, losing more than 11% of their value on Friday. The main reason: the infrastructure company warned of marginThis article was written byThe Asian Investor31.09K FollowersFollowI am interested in a lot of technology and AI stocks like Google, Nvidia, AMD, Tesla and Amazon.Analyst’s Disclosure:I/we have a beneficial long position in the shares of AVGO, NVDA, AMD, TSMC either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.Recommended For You