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Broadcom (AVGO) Strengthens Prospect With Google Cloud Deal
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Broadcom (AVGO - Free Report) recently announced an expanded partnership with Google Cloud aimed at accelerating innovation for enterprises.
The collaboration encompasses various aspects, including optimizing Broadcom’s VMware workloads for Google Cloud, joint go-to-market initiatives, enhancing the offerings on Google Cloud Marketplace, and integrating Broadcom’s products with Google Cloud’s generative AI capabilities.
The partnership will focus on leveraging Google Cloud’s capabilities for VMware workloads, enhancing user experiences, and simplifying operations with generative AI. It will also involve joint product and go-to-market collaboration to better support mutual customers and identify growth opportunities.
Broadcom plans to expand its offerings on Google Cloud Marketplace, providing customers with access to solutions such as Symantec Network Protection for scalable deployment. Additionally, customers can benefit from previously available Marketplace offerings, including Broadcom’s Agile Operations solutions.
A significant development in the partnership is the upcoming portability of VMware Cloud Foundation licenses to Google Cloud VMware Engine, which is expected to be available by July. This will enable customers to flexibly utilize subscriptions in both Google Cloud VMware Engine and their own on-premises data centers, simplifying infrastructure management and enabling the integration of Google Cloud’s AI/ML capabilities.
Broadcom Rides on Strong AI Demand
Broadcom shares have gained 19.5% year to date, outperforming the Zacks Computer & Technology sector’s return of 11.4%. It has been benefiting from an extensive range of semiconductor offerings and a diverse portfolio.
It recently announced the launch of Bailly, the world’s premier 51.2 terabits per second (Tbps) co-packaged optics (CPO) Ethernet switch. This groundbreaking product integrates cutting-edge silicon photonics technology with Broadcom’s renowned StrataXGS Tomahawk 5 switch chip, setting a new standard for efficiency and performance in AI infrastructure.
Broadcom’s innovative manufacturing approach, leveraging proven CMOS foundry processes and advanced packaging technologies, ensures high-volume production of Bailly. Moreover, AVGO’s collaboration with cloud service providers and system integrators underscores its commitment to accelerating the adoption of CPO platforms, ushering in a new era of power-efficient, cost-effective AI clusters.
AVGO is benefiting from the robust adoption of AI and the strong deployment of generative AI. In the first quarter of 2024, under its semiconductor segment, AI revenues quadrupled year on year to $2.3 billion despite sluggish enterprise and telcos end markets.
Broadcom now expects fiscal 2024 AI revenues of roughly $10 billion (higher than previous guidance of $7.5 billion) and to account for 35% of semiconductor revenues (higher than previous guidance of 25%).
Networking revenues are expected to rally 35% year over year, driven by the accelerating deployment of networking connectivity and the expansion of AI accelerators within hyperscalers.
For fiscal 2024, AVGO still expects revenues of $50 billion and adjusted EBITDA margin of 60%.
The Zacks Consensus Estimate for fiscal 2024 is pegged at $50.35 billion, suggesting growth of 40.57% year over year. The consensus estimate for earnings is pegged at $46.92 per share, down 0.2% over the past 30 days, indicating 11.05% year-over-year growth.
Image: Bigstock
Broadcom (AVGO) Strengthens Prospect With Google Cloud Deal
Broadcom (AVGO - Free Report) recently announced an expanded partnership with Google Cloud aimed at accelerating innovation for enterprises.
The collaboration encompasses various aspects, including optimizing Broadcom’s VMware workloads for Google Cloud, joint go-to-market initiatives, enhancing the offerings on Google Cloud Marketplace, and integrating Broadcom’s products with Google Cloud’s generative AI capabilities.
The partnership will focus on leveraging Google Cloud’s capabilities for VMware workloads, enhancing user experiences, and simplifying operations with generative AI. It will also involve joint product and go-to-market collaboration to better support mutual customers and identify growth opportunities.
Broadcom plans to expand its offerings on Google Cloud Marketplace, providing customers with access to solutions such as Symantec Network Protection for scalable deployment. Additionally, customers can benefit from previously available Marketplace offerings, including Broadcom’s Agile Operations solutions.
Broadcom Inc. Price and Consensus
Broadcom Inc. price-consensus-chart | Broadcom Inc. Quote
A significant development in the partnership is the upcoming portability of VMware Cloud Foundation licenses to Google Cloud VMware Engine, which is expected to be available by July. This will enable customers to flexibly utilize subscriptions in both Google Cloud VMware Engine and their own on-premises data centers, simplifying infrastructure management and enabling the integration of Google Cloud’s AI/ML capabilities.
Broadcom Rides on Strong AI Demand
Broadcom shares have gained 19.5% year to date, outperforming the Zacks Computer & Technology sector’s return of 11.4%. It has been benefiting from an extensive range of semiconductor offerings and a diverse portfolio.
It recently announced the launch of Bailly, the world’s premier 51.2 terabits per second (Tbps) co-packaged optics (CPO) Ethernet switch. This groundbreaking product integrates cutting-edge silicon photonics technology with Broadcom’s renowned StrataXGS Tomahawk 5 switch chip, setting a new standard for efficiency and performance in AI infrastructure.
Broadcom’s innovative manufacturing approach, leveraging proven CMOS foundry processes and advanced packaging technologies, ensures high-volume production of Bailly. Moreover, AVGO’s collaboration with cloud service providers and system integrators underscores its commitment to accelerating the adoption of CPO platforms, ushering in a new era of power-efficient, cost-effective AI clusters.
AVGO is benefiting from the robust adoption of AI and the strong deployment of generative AI. In the first quarter of 2024, under its semiconductor segment, AI revenues quadrupled year on year to $2.3 billion despite sluggish enterprise and telcos end markets.
Broadcom now expects fiscal 2024 AI revenues of roughly $10 billion (higher than previous guidance of $7.5 billion) and to account for 35% of semiconductor revenues (higher than previous guidance of 25%).
Networking revenues are expected to rally 35% year over year, driven by the accelerating deployment of networking connectivity and the expansion of AI accelerators within hyperscalers.
For fiscal 2024, AVGO still expects revenues of $50 billion and adjusted EBITDA margin of 60%.
The Zacks Consensus Estimate for fiscal 2024 is pegged at $50.35 billion, suggesting growth of 40.57% year over year. The consensus estimate for earnings is pegged at $46.92 per share, down 0.2% over the past 30 days, indicating 11.05% year-over-year growth.
Zacks Rank & Stocks to Consider
Broadcom currently has a Zacks Rank #4 (Sell).
NVIDIA (NVDA - Free Report) , Veeva Systems (VEEV - Free Report) and Synopsys (SNPS - Free Report) are some better-ranked stocks in the broader sector, each flaunting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Year to date, shares of NVDA, VEEV and SNPS have gained 71.8%, 11.4% and 10.4%, respectively.
Long-term earnings growth rates for NVIDIA, Veeva and Synopsys are currently pegged at 30.93%, 24.09% and 17.51%, respectively.