For most investors, how much a stock's price changes over time is important. Not only can it impact your investment portfolio, but it can also help you compare investment results across sectors and industries.
The fear of missing out, or FOMO, also plays a factor in investing, especially with particular tech giants, as well as popular consumer-facing stocks.
What if you'd invested in Broadcom Inc. (AVGO) ten years ago? It may not have been easy to hold on to AVGO for all that time, but if you did, how much would your investment be worth today?
Broadcom Inc.'s Business In-Depth
With that in mind, let's take a look at Broadcom Inc.'s main business drivers.
Broadcom is a premier designer, developer and global supplier of a broad range of semiconductor devices with a focus on complex digital and mixed signal complementary metal oxide semiconductor (CMOS) based devices and analog III-V based products.
Headquartered in San Jose, CA, Broadcom’s semiconductor solutions are used in end products such as enterprise and data center networking, home connectivity, set-top boxes, broadband access, telecommunication equipment, smartphones and base stations, data center servers and storage systems, factory automation, power generation and alternative energy systems, and electronic displays.
Broadcom’s infrastructure software solutions enable customers to plan, develop, automate, manage, and secure applications across mainframe, distributed, mobile, and cloud platforms. The company’s Symantec cyber security solutions portfolio, include endpoint, network, information and identity security solutions.
Broadcom also offer mission critical fibre channel storage area networking (“FC SAN”) products and related software in the form of modules, switches and subsystems incorporating multiple semiconductor products.
Broadcom has been aggressively pursuing strategic acquisitions to diversify end markets beyond semiconductors and has been looking to strengthen presence in the infrastructure software vertical particularly.
Broadcom reported revenues of $27.45 billion in fiscal 2021. The company has two reporting segments: Semiconductor solutions and Infrastructure software.
Semiconductor solutions accounted for 74.3% of fiscal 2021 revenues. Apart from Broadcom’s semiconductor solution product lines this segment includes IP licensing business.
Infrastructure software solutions accounted for 25.7% of fiscal 2021 revenues. The segment includes mainframe, BizOps, cyber security software solutions, and FC SAN businesses.
Broadcom faces stiff competition from Analog Devices, Cisco, Cree, Finisar, GlobalFoundries, Intel, Lumentum, MACOM, Marvell, Mediatek, NXP Semiconductors, Qorvo, Qualcomm, ON Semiconductor, Skyworks, Toshiba and Texas Instruments in the semiconductor solutions market.
In the infrastructure software market, it faces competition from Cisco, Atlassian, CrowdStrike, CyberArk, IBM, Microsoft, salesforce, Oracle, Splunk, VMware.
While anyone can invest, building a lucrative investment portfolio takes research, patience, and a little bit of risk. If you had invested in Broadcom Inc. ten years ago, you're probably feeling pretty good about your investment today.
A $1000 investment made in August 2012 would be worth $14,618.97, or a gain of 1,361.90%, as of August 2, 2022, according to our calculations. This return excludes dividends but includes price appreciation.
In comparison, the S&P 500 gained 199.47% and the price of gold went up 7.07% over the same time frame.
Going forward, analysts are expecting more upside for AVGO.
Broadcom is riding on continued strength in networking and server storage segments. Networking is well-poised on strong adoption of Broadcom’s next-gen merchant switching and routing solutions by hyperscalers, enterprises and service providers. The company is benefiting from the world’s first complete end-to-end chipset solutions for the Wi-Fi 7 ecosystem. In the server storage connectivity domain, much of the growth is anticipated from the continued recovery of enterprise IT spending deployed toward upgrading computer services. An upbeat third-quarter fiscal 2022 guidance is encouraging. The recently announced VMware acquisition will aid prospects in the long term. The company’s shares have outperformed the industry year to date. However, increasing competition, along with high debt levels, are persistent woes.
The stock is up 12.25% over the past four weeks, and no earnings estimate has gone lower in the past two months, compared to 1 higher, for fiscal 2022. The consensus estimate has moved up as well.
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