July 21, 2024

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Should You Buy Broadcom Now — or After the Stock Split?

2 min read

Artificial intelligence (AI) has been driving the revenue and share price growth of many technology companies in recent times. Investors are piling into these players that are benefiting from the AI boom now and could have even more to gain down the road. After all, analysts predict that today’s $200 billion AI market might surge past $1 trillion by the end of the decade.

Broadcom (NASDAQ: AVGO) is one of the players benefiting from the movement. The semiconductor and networking giant has seen demand take off, and this has helped the stock price to climb more than 60% since the start of the year. But Broadcom just announced a move that soon will bring its high-flying stock down to Earth. The tech company is planning a stock split next month, an operation that will lower its stock price from more than $1,800 today to about $180.

Now the question is: Should you buy Broadcom now or wait to get in on this AI player after the stock split? Let’s find out.

An investor looks at something on a phone.

Image source: Getty Images.

Why Broadcom’s a good buy

First, a bit of background on Broadcom itself and why the company generally is a good buy. Broadcom makes a wide variety of semiconductor and infrastructure software products — in fact, the company produces thousands of products used in a variety of areas, from data center servers to smartphones. More than 99% of internet traffic travels through Broadcom technology, a statistic showing the major role of this company in the areas of networking and connectivity. Further expanding its revenue opportunity, Broadcom recently completed its acquisition of cloud computing software company VMware.

In the most recent quarter, Broadcom reported a 43% increase in revenue to more than $12 billion. And AI revenue, driven by demand for AI networking and custom accelerators, surged 280% to $3.1 billion. During the quarter, Broadcom doubled the number of switches sold, and the company is developing next-generation switches, optics, and other tools that will support the networking needs…

2024-06-22 04:15:00

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