AVGO Expands Connectivity Portfolio to Tap 6G: What's Ahead?

Core Insights - Broadcom (AVGO) is launching BroadPeak, a radio digital front-end (DFE) SoC device, enhancing its Semiconductor Solutions segment and targeting next-generation 5G Advanced and 6G wireless infrastructure [1][9] - BroadPeak is the first solution to meet the technical requirements for the upcoming 5G Advanced standard and the 6G standard, featuring a power reduction of up to 40% compared to existing solutions [1][9] Semiconductor Solutions Expansion - The introduction of BroadPeak, along with the BCM4918 accelerated processing unit (APU) and two new dual-band Wi-Fi 8 devices, strengthens Broadcom's Wireless Device Connectivity solutions business [2] - The semiconductor segment is benefiting from strong demand for XPUs, which are essential for training Generative AI models [2] Revenue Expectations - Broadcom anticipates first-quarter fiscal 2026 AI revenues to double year-over-year to $8.2 billion, with semiconductor revenues expected to reach $12.3 billion, indicating a 50% year-over-year growth [3] - The Zacks Consensus Estimate for semiconductor revenues is currently at $12.09 billion, reflecting a 47.3% year-over-year growth [3] Competitive Landscape - Broadcom faces significant competition in the semiconductor market from NVIDIA and Skyworks [4] - NVIDIA is experiencing strong growth in AI and high-performance computing, with data center revenues increasing by 66% year-over-year [5] - Skyworks is targeting high-growth areas such as connected vehicles and data center networking, with improving demand signals across its customer base [6] Stock Performance and Valuation - Broadcom's shares have appreciated by 63.1% over the past year, outperforming the broader Zacks Computer and Technology sector, which returned 26.8% [7][8] - The Zacks Consensus Estimate for fiscal 2026 earnings is $10.25 per share, suggesting a growth of 50.3% from fiscal 2025 [12] - Broadcom's stock is trading at a forward price/earnings ratio of 28.77X, higher than the sector average of 25.5X, indicating a stretched valuation [14]