Do You Have Conviction in the Long-Term Growth of Broadcom Inc. (AVGO)?

"Broadcom Inc. (NASDAQ:AVGO) is a leading semiconductor and enterprise software company, generating approximately 60% of revenue from semiconductors and 40% from software. The company is strategically positioned at the intersection of high-performance AI compute and networking infrastructure, while also demonstrating disciplined execution in software. Broadcom has extended its leadership in networking silicon from the cloud era into the AI era and is regarded as the most reliable silicon partner for AI foundational model builders designing custom chips to train frontier models. Shares rose during the quarter on accelerating momentum in Broadcom’s AI product lines and strong business visibility into next year. In its July quarter, Broadcom reported almost $16 billion in total revenue, up 22%; $5.2 billion in AI revenue, up 63%; and $6.8 billion in software revenue, up 17%. Broadcom continued to demonstrate excellent profitability, with EBITDA margins over 67% and free cash flow margins at 44%. While Broadcom continues to execute with its key custom AI accelerator customer, Google, it is on track for volume production with two additional customers (likely Meta and ByteDance), has secured a fourth customer with orders worth $10 billion next year, and announced a 10 GW deal with a notable fifth customer, OpenAI. Beyond AI, Broadcom is advancing VMware integration, while its non-AI semiconductor businesses appear to be bottoming and may gradually recover in the coming quarters. We retain our long term conviction in Broadcom’s position within the AI ecosystem."