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Broadcom Limited (AVGO - Free Report) recently announced the first-ever silicon-proven 7nm intellectual property (IP) targeting application-specific integrated circuit (ASIC) platform for deep learning and networking.

The IP cores are built on Taiwan Semiconductor Manufacturing Company’s (TSM - Free Report) 7nm process technology. The on-die computation required for training and inference of deep learning applications is expected to benefit from ultra-high density logic and memory of the 7nm ASIC platform.

The combination of CoWoS packaging and HBM2/3 PHY caters to high bandwidth memory interface required for next generation training in deep learning, high performance computing (HPC) and routing applications.

The platform’s SerDes cores (112G and 56G SerDes) are beneficial for switching and routing applications and inter-node connections in HPC applications and deep learning. The IP portfolio also supports SoC integration for 5G requirements.

We believe this to aid Broadcom’s top-line growth going ahead.

Growth Factors

Broadcom stock has gained 55.8% year to date, substantially outperforming the 40.5% rally of the industry it belongs to. The growth can be attributed to the company’s robust top-line growth and steady execution.



Broadcom benefits from strong demand of its wireless solutions. Higher dollar content at the company’s large North American smartphone customer’s (Apple) next-gen platform (iPhone) is also a positive for the company. Robust industrial re-sales are also tailwinds.

Notably, the company’s recent acquisition of Brocade Communications Systems is expected to boost Broadcom’s position in the storage area networking space.

Broadcom is currently eyeing Qualcomm (QCOM - Free Report) . The latter has already turned down the recent takeover bid of $130-billion (includes $25 billion of net debt) on grounds of inadequacy as it is currently a leading player in the chipset market. However, the company is planning to raise the bid amount for Qualcomm, per Reuters.

We believe that Broadcom’s product portfolio, enhanced by the offerings of its acquired entities, is a major tailwind. However, increasing competition from industry peers like Intel (INTC - Free Report) and Sumitomo remains a concern.

Broadcom Limited Revenue (TTM)

Zacks Rank

Broadcom has a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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