Afraid You Missed the AI Boom? This Late-Cycle Winner Could Be Your Second Chance.

Core Insights - The rise of generative AI, particularly with the adoption of ChatGPT, has led to increased demand for advanced AI chips, prompting data centers and cloud providers to seek high-performance solutions [1][2] Company Performance - Broadcom reported record revenue of $18 billion in Q4, a 28% year-over-year increase, with adjusted EPS of $1.95, up 37% [5] - AI semiconductor revenue for Broadcom grew 74% year-over-year to $6.5 billion, with expectations for AI-centric sales to increase by 104% to $8.2 billion [5] Market Position and Growth Potential - Broadcom's application-specific integrated circuits (ASICs) offer energy-efficient alternatives to traditional GPUs, aligning with the industry's shift towards more economical AI solutions [4][3] - The company's backlog grew 47% to a record $162 billion, indicating strong future revenue potential, with CEO Hock Tan emphasizing AI as the primary growth driver [6] Analyst Sentiment - Analysts have a positive outlook on Broadcom, with an average price target of approximately $456, suggesting a potential upside of 42% [8] - A significant majority of analysts (96%) rate Broadcom as a buy or strong buy, reflecting confidence in the company's growth trajectory [8] Valuation Metrics - Broadcom is currently trading at 31 times forward sales and has a PEG ratio of 0.23, indicating it may be undervalued given its growth prospects [9]