Broadcom (NASDAQ:AVGO) Trading Down 7.9% - What's Next?

Key Points

• Broadcom shares fell 7.9% on Friday, closing near $385.73 after heavy trading volume, as investors reacted to a sharp reset in sentiment following the company’s latest earnings update.
• Despite the selloff, Broadcom reported strong quarterly results with EPS of $2.44 and revenue of $22.19 billion, and AI semiconductor revenue hit $10.8 billion, more than doubling year over year.
• The drop appears driven more by high expectations and valuation concerns than by fundamentals, with investors viewing Broadcom’s AI guidance as too modest and the weakness spreading across other chip stocks.

Broadcom Inc. (NASDAQ:AVGO - Get Free Report)'s share price was down 7.9% on Friday . The stock traded as low as $385.59 and last traded at $385.73. Approximately 50,495,264 shares changed hands during trading, an increase of 98% from the average daily volume of 25,562,018 shares. The stock had previously closed at $418.91.

Trending Headlines about Broadcom

Here are the key news stories impacting Broadcom this week:

• Positive Sentiment: Multiple analysts remain bullish, including JPMorgan, Bank of America, Mizuho, Benchmark, Truist, TD Cowen, Rosenblatt and others, with several raising price targets after the earnings report, signaling Wall Street still sees meaningful upside. Analyst target updates
• Positive Sentiment: Broadcom said AI semiconductor revenue reached $10.8 billion in the quarter, more than doubling year over year, and it guided Q3 revenue to about $29.4 billion, showing the business is still growing rapidly. Broadcom Q2 results press release
• Positive Sentiment: Several upbeat commentaries argued the selloff is more about valuation and investor expectations than fundamentals, with some pointing to Broadcom’s strong AI custom silicon demand and long-term growth story. AI trade commentary
• Neutral Sentiment: Broadcom also declared a quarterly dividend of $0.65 per share, which supports the stock’s income appeal but is not the main driver of trading today. Dividend announcement
• Negative Sentiment: Investors sold the stock because Broadcom’s AI revenue guidance and overall outlook were seen as too modest relative to very high expectations, sparking a broader semiconductor selloff that also hit AMD, Intel, Micron and Marvell. Reuters Broadcom selloff report
• Negative Sentiment: Broadcom’s software revenue and near-term AI guidance were viewed as not enough to justify the stock’s premium valuation, leading to a sharp reset in sentiment and dragging down the broader chip group. Broadcom rout and semiconductor selloff

Wall Street Analyst Weigh In

Several brokerages have commented on AVGO. Erste Group Bank raised shares of Broadcom from a "hold" rating to a "buy" rating in a research note on Friday. Oppenheimer reissued an "outperform" rating and issued a $535.00 price target (up from $450.00) on shares of Broadcom in a report on Thursday. TD Cowen restated a "buy" rating and issued a $500.00 price objective on shares of Broadcom in a research report on Thursday. Bank of America raised their price objective on Broadcom from $450.00 to $530.00 and gave the stock a "buy" rating in a research note on Thursday. Finally, Wells Fargo & Company reissued an "overweight" rating and issued a $545.00 target price (up from $430.00) on shares of Broadcom in a research note on Thursday, May 14th. One research analyst has rated the stock with a Strong Buy rating, twenty-nine have given a Buy rating and three have issued a Hold rating to the company. Based on data from MarketBeat, the company currently has a consensus rating of "Moderate Buy" and a consensus target price of $490.13.

Broadcom Price Performance

The company has a debt-to-equity ratio of 0.80, a current ratio of 1.90 and a quick ratio of 1.73. The company's 50-day moving average price is $394.88 and its 200-day moving average price is $361.73. The company has a market cap of $1.83 trillion, a P/E ratio of 64.29, a P/E/G ratio of 0.99 and a beta of 1.41.

Broadcom (NASDAQ:AVGO - Get Free Report) last posted its quarterly earnings data on Wednesday, June 3rd. The semiconductor manufacturer reported $2.44 EPS for the quarter, beating the consensus estimate of $2.40 by $0.04. The business had revenue of $22.19 billion for the quarter, compared to analysts' expectations of $22.13 billion. Broadcom had a net margin of 38.85% and a return on equity of 42.88%. The firm's revenue was up 47.9% compared to the same quarter last year. During the same period in the previous year, the firm posted $1.58 EPS. As a group, sell-side analysts predict that Broadcom Inc. will post 9.89 earnings per share for the current fiscal year.

Broadcom Announces Dividend

The company also recently disclosed a quarterly dividend, which will be paid on Tuesday, June 30th. Stockholders of record on Monday, June 22nd will be given a dividend of $0.65 per share. This represents a $2.60 annualized dividend and a dividend yield of 0.7%. The ex-dividend date of this dividend is Monday, June 22nd. Broadcom's dividend payout ratio is currently 43.33%.

Insider Transactions at Broadcom

In related news, insider Charlie B. Kawwas sold 39,116 shares of Broadcom stock in a transaction that occurred on Tuesday, March 17th. The stock was sold at an average price of $321.61, for a total value of $12,580,096.76. Following the sale, the insider owned 74,626 shares of the company's stock, valued at approximately $24,000,467.86. This trade represents a 34.39% decrease in their position. The sale was disclosed in a filing with the Securities & Exchange Commission, which can be accessed through this hyperlink. Also, insider Mark David Brazeal sold 50,488 shares of the company's stock in a transaction that occurred on Tuesday, March 17th. The stock was sold at an average price of $321.60, for a total value of $16,236,940.80. Following the transaction, the insider directly owned 278,141 shares of the company's stock, valued at approximately $89,450,145.60. This trade represents a 15.36% decrease in their position. The SEC filing for this sale provides additional information. Insiders have sold a total of 324,282 shares of company stock valued at $106,425,249 in the last ninety days. Corporate insiders own 1.90% of the company's stock.

Institutional Inflows and Outflows

Several large investors have recently added to or reduced their stakes in the business. Brighton Jones LLC grew its stake in Broadcom by 21.8% in the fourth quarter. Brighton Jones LLC now owns 29,683 shares of the semiconductor manufacturer's stock valued at $6,882,000 after purchasing an additional 5,322 shares in the last quarter. Revolve Wealth Partners LLC boosted its holdings in shares of Broadcom by 10.4% in the 4th quarter. Revolve Wealth Partners LLC now owns 7,997 shares of the semiconductor manufacturer's stock valued at $1,854,000 after buying an additional 756 shares during the last quarter. United Bank grew its stake in shares of Broadcom by 76.5% in the first quarter. United Bank now owns 2,339 shares of the semiconductor manufacturer's stock valued at $392,000 after buying an additional 1,014 shares in the last quarter. Sivia Capital Partners LLC grew its stake in shares of Broadcom by 10.1% in the second quarter. Sivia Capital Partners LLC now owns 12,693 shares of the semiconductor manufacturer's stock valued at $3,499,000 after buying an additional 1,160 shares in the last quarter. Finally, Capital & Planning LLC increased its holdings in Broadcom by 10.5% during the second quarter. Capital & Planning LLC now owns 3,983 shares of the semiconductor manufacturer's stock worth $1,098,000 after buying an additional 378 shares during the last quarter. Institutional investors and hedge funds own 76.43% of the company's stock.

Broadcom Company Profile

Broadcom Inc NASDAQ: AVGO is a global technology company that designs, develops and supplies semiconductor and infrastructure software solutions for a broad range of markets. The company's semiconductor business provides components and systems for wired and wireless communications, enterprise and cloud storage, networking and broadband access, serving original equipment manufacturers, cloud service providers, telecommunications carriers and industrial customers worldwide. Broadcom is headquartered in Irvine, California, and operates globally with research, development and sales organizations across North America, Europe and Asia.

On the semiconductor side, Broadcom's portfolio includes system-on-chip (SoC) and application-specific integrated circuit (ASIC) solutions, radio-frequency and connectivity components, Ethernet switching and PHY devices, storage adapters and controllers, optical transceivers and other networking silicon.

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