Broadcom Earnings: AI Growth and VMware Integration Align With Our Thesis and $155 Valuation

We maintain our $155 fair value estimate for shares of wide-moat Broadcom, and our long-term growth thesis is intact. Artificial intelligence continues to drive the firm’s organic growth in fiscal 2024, supplemented by the continuing inorganic addition of VMware. Non-AI semiconductor revenue remains weak, but we have increasing confidence that these non-AI chip markets will rebound over the coming quarters. Broadcom’s fiscal third-quarter results and fiscal fourth-quarter guidance were in line with our expectations. We continue to expect strong growth over the next five years, driven by AI chip demand, VMware, and rebounding non-AI chip markets. Shares dipped about 6% after-hours on guidance, lightly missing Factset consensus expectations, leaving them fairly valued.