This tech stock is comparable to NVIDIA during its 2023 bull run!

Broadcom$Broadcom(AVGO.US)’s latest earnings report and guidance have exceeded market expectations across the board, coupled with the confirmation of a large order from OpenAI, not only driving the stock price to rise against the trend but also prompting a re-evaluation of the global AI chip competition landscape.

From core data to long-term strategy, the company is demonstrating explosive potential similar to NVIDIA in 2023, becoming a key player in the AI industry chain that cannot be ignored.

1. Profit Performance: Multiple Core Metrics Exceed Expectations

The earnings report shows that Broadcom’s current revenue reached $15.952 billion, a year-on-year increase of 22%, basically in line with the market’s expectation of $15.8 billion;

The net profit performance was even more impressive, recording $8.404 billion, a year-on-year increase of 37.3%, significantly outpacing revenue growth.

In terms of profitability, EBITDA (earnings before interest, taxes, depreciation, and amortization) was $10.702 billion, accounting for 67% of revenue, a year-on-year increase of 30%, slightly higher than the market’s expectation of $10.5 billion;

Diluted earnings per share (EPS) was $1.69, not only higher than the expected $1.65 but also achieving a year-on-year growth rate of 36.3%, with both profit quality and shareholder return capabilities improving simultaneously.

2. Business Data: AI and Semiconductors Become Dual Growth Engines

By business segment, Broadcom’s core business presents a pattern of "semiconductors leading, AI booming, and software remaining robust."

Among them, the semiconductor solutions business, including ASIC (application-specific integrated circuit), generated revenue of $9.166 billion, a year-on-year increase of 26%, accounting for 57% of total revenue, slightly exceeding analysts’ expectations of $9.1 billion, becoming the cornerstone of revenue;

The AI-related business (including XPU) performed most prominently, with revenue of $5.2 billion, a sharp year-on-year increase of 63%, highlighting the strong pull of AI computing demand on the company;

The infrastructure software business (including VMware) generated revenue of $6.786 billion, a year-on-year increase of 17%, accounting for 43% of total revenue, providing stable support for the business.

In terms of cash flow, free cash flow reached $7 billion, accounting for 45% of revenue, with both corporate operational health and capital reserve capabilities at high levels.

3. Guidance: High Growth Certainty and Order Benefits

Future growth expectations are further strengthened, with Broadcom’s Q4 guidance exceeding market expectations across the board:

Q4 revenue is expected to be $17.4 billion, a year-on-year increase of 24%, exceeding the expected $17.1 billion; Q4 semiconductor business revenue is expected to be $6.2 billion, higher than the market’s expectation of $5.9 billion; Q4 EBITDA is expected to maintain 67%, also higher than the expected 66.6%.

More critically, the company confirmed that the $10 billion order with OpenAI will begin delivery in Q3 next year, and overall revenue growth next year is expected to exceed this year’s, laying a solid foundation for long-term growth.

4. Short- to Medium-Term Focus and Valuation Outlook

In the short to medium term, the actual performance of the ASIC business and whether the guidance can continue to exceed expectations, as well as whether the growth rate of customized chips will outpace NVIDIA’s GPUs, will become core industry discussion topics and key indicators for judging Broadcom’s growth resilience.

In terms of valuation, Broadcom’s current forward PE (price-to-earnings ratio) is less than 40x, at a historically low range; combined with high growth expectations over the next three years, institutions generally believe its market capitalization could reach half or even more of NVIDIA’s, with clear growth potential.

Based on this, I have raised Broadcom’s target price to $375, believing the company still has considerable upside potential, and the earnings report’s growth preview may continue to drive market sentiment.

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