Broadcom Inc.

NASDAQ Global Select
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Bullish +65

Jim Cramer on Broadcom (AVGO): “The Stock May Be Too Cheap to Ignore”

AI-generated analysis

📈 Jim Cramer identifies Broadcom as an attractive investment opportunity after the stock dropped over 10% in the past month.

💰 Fiscal Q3 total revenue reached $29.6 billion, representing an 85.5% increase compared to the same period last year.

🤖 AI semiconductor revenue surged 221% to $16.7 billion, accounting for roughly 56% of total company revenue.

📅 Management raised full-year AI revenue guidance to $58 billion from a previous estimate of $56 billion.

🔮 Long-term projections include $115 billion in AI revenue for fiscal 2027 and $230 billion for fiscal 2028.

📉 Stock price dropped roughly 7% since the September 2 earnings report due to near-term guidance expectations.

💹 The forward earnings multiple compressed to 18.1x following the recent market pullback.

🏢 Broadcom serves major hyperscale AI customers including Alphabet and Meta Platforms.

📊 Institutional interest remains substantial with 170 hedge funds holding stakes in the company.

🛡️ Short interest is low at 1.08% of float as of August 31, indicating minimal short positioning.

Bullish Signals
  • Broadcom reported fiscal Q3 total revenue of $29.6 billion, an 85.5% year-over-year increase driven by a massive surge in AI semiconductor sales.
  • Artificial intelligence semiconductor revenue reached $16.7 billion, representing 56% of total revenue and growing at a rate of 221% compared to the prior year.
  • Management raised full-year AI revenue guidance to $58 billion, projecting long-term growth of $115 billion for fiscal 2027 and $230 billion for fiscal 2028.
  • The company maintains deep integration into the enterprise AI ecosystem through custom accelerators and high-speed networking solutions for major clients like Alphabet and Meta.
  • Remaining performance obligations climbed significantly to $179.2 billion, providing substantial visibility into future contracted revenue streams.
Risk Factors
  • The stock dropped roughly 7% since the September 2 earnings report as investors reacted sharply when near-term guidance failed to match previous explosive beats.
  • Market reaction suggests some investors remain concerned about the inherent cyclicality of the chip sector and shifting capital spending plans across major tech giants.
Full Analysis
Jim Cramer highlighted Broadcom Inc. (NASDAQ: AVGO) as a potential bargain during the September 14 episode of Mad Money, noting that the stock has dropped more than 10% over the past month despite strong recent results. He argued that while near-term guidance was viewed as merely in line with expectations, the company remains central to the AI ecosystem and offers an attractive entry point roughly 150 points below its June high. Broadcom reported fiscal third-quarter total revenue of $29.6 billion, an 85.5% year-over-year increase, driven by a surge in artificial intelligence semiconductor revenue which reached $16.7 billion or 56% of total sales. Management raised full-year AI revenue guidance to $58 billion and provided long-term projections of $115 billion for fiscal 2027 and $230 billion for fiscal 2028, underscoring deep integration with major hyperscale customers like Alphabet and Meta. Following the earnings report on September 2, Broadcom's stock fell approximately 7% as investors reacted to near-term guidance that did not match previous explosive beats. However, this pullback compressed the forward earnings multiple to a more reasonable 18.1x, suggesting a potential undervaluation relative to its massive multi-year tailwinds and essential role in AI infrastructure.