Semiconductor Giant Broadcom: Will It Split Again?
A Recent History of Stock Splits
Broadcom, a leading semiconductor and software company, made headlines this summer with a 10-for-1 stock split. Despite the recent surge in its stock price, nearly 30% in just a few weeks, the question remains: will Broadcom announce another stock split soon?
The Purpose of Stock Splits
Stock splits are designed to make trading easier for smaller investors and employees. By increasing the total share count, the share price is lowered, making it more accessible to a wider range of investors. Employees also benefit from having more control over their shares, which they may have received as compensation.
No Rules, No Limits
There are no rules governing why or how often a company can split its stock. In fact, Tesla executed two stock splits in just two years, resulting in a 15-fold increase in shares for investors. While Broadcom’s recent split was only five months ago, it’s possible that the company may consider another split in the near future.
Exciting Developments in AI
Broadcom recently announced significant advancements in its artificial intelligence (AI) opportunities, including the development of XPU AI chips for three large customers, with two more in the works. This technology is poised to revolutionize AI inference, enabling AI models to effectively apply their trained intelligence to new data. With a projected revenue opportunity of $60 billion to $90 billion by 2027, Broadcom’s AI growth catalyst could lead to a doubling of its revenue in the next five to 10 years.
A Reasonable Valuation
Broadcom’s stock currently trades at a price-to-earnings-growth (PEG) ratio of around 2, which is reasonable for a high-quality company with expected earnings growth of almost 18% over the next three to five years. As growth estimates increase, the stock price may follow, potentially leading to a stock split consideration.
A Potential Stock Split on the Horizon?
If Broadcom’s stock reaches $350 to $400 per share, a stock split may be on the table. While the next split might not be as dramatic as the last one, it could still be a 4-for-1 or 2-for-1 split. Remember, stock splits shouldn’t be the primary reason for investing in a company, but rather a bonus for shareholders.
Don’t Miss Out on the Next Big Opportunity
If you’re worried about missing out on the next big investment opportunity, consider the long-term AI upside of Broadcom and other high-growth companies. With the right guidance, you can make informed investment decisions and potentially reap significant rewards.
Leave a Reply