Strong Market Position
Solid Profit Margins
Good Return on Equity
Decent Liquidity Ratios
Manageable Debt Levels
Strong Revenue Growth
Successful VMware Integration
High Cash Return to Shareholders
Massive AI Market Opportunity
Continued Innovation in AI Technology
High Valuation Ratios
Moderate Net Profit Margin
High Debt Load
Non-AI Semiconductor Revenue Decline
Broadcom's strong financial performance and successful integration of VMware reflect a solid business model with competitive advantages. The company is well-positioned for future growth, particularly in the AI market, although it faces challenges in its non-AI segments. Overall, the future prospects appear promising with substantial revenue opportunities in AI.
Analysis Date: December 12, 2024
Last Updated: March 11, 2025
Trailing Twelve Months (TTM) values provide a view of the company's performance over the last year.
Benjamin Graham's value investing approach focuses on finding stocks with a significant margin of safety between their intrinsic value and market price.
Intrinsic Value
Estimated fair value based on Graham's formula
$82.60
Current Market Price: $146.51
IV/P Ratio: 0.56x (>1.0 indicates undervalued)
Margin of Safety
Gap between intrinsic value and market price
-77.0%
Graham recommended a minimum of 20-30% margin of safety
Higher values indicate a greater potential discount to fair value
Graham Criteria Checklist
Benjamin Graham's value investing checklist for AVGO
Positive earnings (5+ years)
Dividend history (5+ years)
P/E ratio ≤ 20 (68.19)
P/B ratio ≤ 1.5 (9.84)
Current ratio ≥ 2.0 (1.00x)
Long-term debt < Net current assets (761.58x)
Margin of safety (-77.0%)
AVGO does not meet all Graham criteria
Trailing Twelve Months (TTM) values provide a view of the company's performance over the last year.
AVGO has a gross profit margin of approximately 60.18%, showcasing effective cost management and strong pricing power.
With a return on equity of 8.62%, AVGO demonstrates effective use of shareholders' equity to generate profits.
The net profit margin of 11.43% suggests that while AVGO is profitable, there may be room for improvement in converting revenue into actual profit.
Profitability metrics measure a company's ability to generate earnings relative to its revenue, operating costs, and other relevant metrics. Higher values generally indicate better performance.
Return on Equity (ROE)
Measures how efficiently a company uses its equity to generate profits
14.75%
Higher values indicate better returns for shareholders
TTM (as of 2025-04-16)
Return on Assets (ROA)
Measures how efficiently a company uses its assets to generate profits
3.33%
Higher values indicate better asset utilization
TTM (as of 2025-04-16)
Gross Profit Margin
Percentage of revenue retained after accounting for cost of goods sold
63.28%
Higher values indicate better efficiency in production
TTM (as of 2025-04-16)
Net Profit Margin
Percentage of revenue retained after accounting for all expenses
18.47%
Higher values indicate better overall profitability
TTM (as of 2025-04-16)
AVGO's current ratio of 1.17 indicates it has enough short-term assets to cover its short-term liabilities, reflecting good liquidity.
With a debt-to-equity ratio of 0.998, AVGO maintains a balanced approach to leveraging, indicating moderate financial risk.
The debt-to-assets ratio of approximately 40.79% suggests that a significant portion of AVGO's assets are financed by debt, which could pose risks in adverse conditions.
Financial health metrics assess a company's ability to meet its financial obligations and its overall financial stability.
Debt to Equity Ratio
Total debt divided by total equity
0.95x
Lower values indicate less financial leverage and risk
Less than 1.0 is conservative, 1.0-2.0 is moderate, >2.0 indicates high risk
Q1 2025
Current Ratio
Current assets divided by current liabilities
1.00x
Higher values indicate better short-term liquidity
Less than 1.0 is concerning, 1.0-2.0 is adequate, greater than 2.0 is good
Q1 2025
Broadcom achieved a record consolidated revenue growth of 44% year-over-year, reaching $51.6 billion for fiscal year 2024. The semiconductor revenue also saw significant growth, indicating a robust demand for its products.
The acquisition of VMware has been transformative, with the integration largely complete and VMware's revenue trajectory on a growth path. Operating margins for VMware reached 70%, showcasing effective management post-acquisition.
Broadcom returned a record $22 billion in cash to shareholders through dividends and buybacks, highlighting a strong commitment to shareholder value.
Broadcom projects a Serviceable Addressable Market (SAM) of $60 billion to $90 billion in AI revenue by fiscal 2027, driven by strong demand from hyperscalers for custom AI accelerators and networking solutions.
Broadcom is positioned to lead in AI semiconductor solutions, with a significant growth in AI revenue (220% year-over-year) and plans for next-generation 3-nanometer XPUs, which will enhance performance and capabilities.
There was a notable decline in non-AI semiconductor revenue by 23% year-over-year, indicating potential challenges in that segment amid the AI-focused growth strategy.