Broadcom Corp.’s (AVGO) shares, which experienced a surge at the beginning of 2023, have been consolidating since reaching a peak in late June. The stock has captured the attention of CNBC’s Mad Money host, Jim Cramer, who recently shared his positive view on the company.
Stephanie Link, chief investment strategist and portfolio manager at Hightower Advisors, has made a purchase of Broadcom shares, according to Cramer’s post on X (formerly Twitter). While Link’s investment was noteworthy, Cramer’s comment about his own stance on Broadcom caught even more attention. He declared, “Broadcom is a stock I like very much…” This declaration, however, sparked some amusement on social media, with users reminding Cramer about his past criticisms of certain stocks that later performed well.
Broadcom’s rise to prominence is a testament to its successful foray into artificial intelligence. The company, once operating under the radar, is now the 11th most valuable global corporation, boasting a market capitalization of over $766 billion. This makes Broadcom the highest-valued tech company outside of the “Magnificent Seven” (minus Tesla) and TSMC.
The company recently reported impressive third-quarter results, exceeding Wall Street estimates, thanks to robust AI revenue and the strong performance of its VMware business. Broadcom also raised its AI revenue guidance for the fourth quarter and the full year. Despite these positive developments, slightly conservative fourth-quarter guidance caused the stock to drop by over 10% immediately after the results were released. Since then, the stock has rebounded, gaining nearly 20% from its post-earnings low.
Broadcom trades at a reasonable forward price-to-earnings multiple of 26.81, a more attractive valuation compared to Nvidia Corp.’s (NVDA) 41/49. It’s worth noting that Rep. Nancy Pelosi (D-Calif), known for her active investments, bought 20 Broadcom call options on June 24th, with a strike price of $800 and an expiration date of June 20, 2025. This purchase was made after the company reported its second-quarter results on June 12th and announced a 10-for-1 stock split. The stock began trading on a split-adjusted basis on July 15th. The congresswoman’s call options now have a strike price of $80, reflecting the split.
Analysts’ price target for Broadcom is $198.66, according to TipRanks, suggesting over 21% upside potential from current levels. In premarket trading on Tuesday, the stock gained 0.90% to $165.50. Year-to-date, it has surged by 48%.
Broadcom’s success in AI and its strong financial performance have positioned it as a company to watch in the technology sector. With investors like Jim Cramer and Nancy Pelosi taking notice, it’s clear that Broadcom is on the radar of many. However, potential investors should consider the recent dip after earnings and the overall market conditions before making any investment decisions.
