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Broadcom (AVGO) and Caltech Unite for Quantum Research Innovation

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Broadcom (AVGO - Free Report) is expanding its footprint in the realm of quantum science through a multi-year partnership with the California Institute of Technology (Caltech). This collaboration aims to propel quantum science research and foster innovations with wide-ranging applications.

With a substantial investment, AVGO established the Broadcom Quantum Laboratory at Caltech, fostering collaboration in quantum computing, sensing and engineering.

This strategic collaboration capitalizes on Caltech's illustrious history in quantum research, where their faculty's pioneering work, spanning theoretical and experimental domains, has impacted fields ranging from energy and pharmaceuticals to information technology and security.

With this partnership, AVGO will cement its commitment to advancing quantum sciences and solidify its position as a key player at the forefront of transformative technological innovation.

Broadcom Inc. Price and Consensus

 

Broadcom Inc. Price and Consensus

Broadcom Inc. price-consensus-chart | Broadcom Inc. Quote

 

Strong Portfolio Aids Broadcom’s Prospects

The latest move is in sync with the company's effort to strengthen its position and expand its influence within the quantum science sector.

The stock has returned 91.8% year to date compared with the Zacks Computer and Technology sector’s rally of 47.1%. The outperformance can be attributed to AVGO’s robust and diversified portfolio and strategic investments.

Broadcom's extensive range of semiconductor offerings positions the company as a comprehensive player in the technology industry, showcasing a diverse portfolio.

In October 2023, global semiconductor industry sales totaled $46.6 billion, up 3.9% from September 2023's $44.9 billion.

The firm is benefiting from the robust deployment of generative AI, with Ethernet solutions and custom AI accelerators contributing $1.5 billion or 20% of semiconductor revenues.

To further strengthen its presence, Broadcom expands the semiconductor sector by introducing the Trident 5-X12 chip with NetGNT for real-time traffic analysis, advanced congestion control, 16.0 Terabits/second bandwidth and 800G port support while using 25% less power per 400G port compared with Trident 4-X9.

Broadcom's recent acquisition of VMware in November 2023 is in line with the company's objective of facilitating global enterprises in the seamless operation of applications across diverse data centers and public clouds.

To enhance efficiency, Broadcom plans to divest non-core businesses, including end-user computing (EUC) and Carbon Black, within VMware. This streamlining strategy enables the company to focus on its core business priorities.

Fiscal 2024 View Positive

For fiscal 2024, the company expects revenues of $50 billion. The Zacks Consensus Estimate for fiscal 2024 is pegged at $38.15 billion, suggesting growth of 6.51% year over year.

VMware is expected to contribute $12 billion to revenues. Infrastructure software revenues are expected to be $20 billion.

Networking revenues are expected to rally 30% year over year, driven by the accelerating deployment of networking connectivity and the expansion of AI accelerators within hyperscalers for the fiscal 2024.

Broadcom expects revenues from generative AI to contribute more than 25% to the semiconductor revenues in fiscal 2024. Semiconductor solutions revenues are expected to increase in the mid to high-single-digit percentage range on a year-over-year basis.

Zacks Rank & Stocks to Consider

Currently, AVGO carries a Zacks Rank #3 (Hold).

Flex (FLEX - Free Report) , Intel (INTC - Free Report) and Camtek (CAMT - Free Report) are a few better-ranked stocks that investors can consider from the broader sector, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Flex, Intel, and Camtek shares have returned 21.8%, 66.9% and 196%, respectively, on a year-to-date basis.

Long-term earnings growth rates for Flex, Intel and Camtek are pegged at 12.39%,14.18% and 12.26%, respectively.

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