Broadcom initiated at Hold by HSBC

Investing.com12-04

Investing.com -- HSBC initiated coverage on Broadcom (NASDAQ:AVGO) with a Hold rating and a price target of $160 per share on Tuesday, citing limited upside to FY25 earnings amid slowing momentum in ...

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href=https://finance.yahoo.com/news/broadcom-initiated-hold-hsbc-185103217.html><strong>Investing.com</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Investing.com -- HSBC initiated coverage on Broadcom (NASDAQ:AVGO) with a Hold rating and a price target of $160 per share on Tuesday, citing limited upside to FY25 earnings amid slowing momentum in ...</p>\n\n<a href=\"https://finance.yahoo.com/news/broadcom-initiated-hold-hsbc-185103217.html\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"NVD","symbol_name":"GraniteShares 2x Short NVDA Daily 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earnings amid slowing momentum in key segments and potential headwinds in FY26.\nBroadcom is a significant player in the AI sector, driven by its custom silicon and AI networking (switch) business. \nWhile FY24 application-specific integrated circuit (ASIC) revenue is expected to grow by 185% year-over-year, HSBC forecasts a sharp deceleration to 23% growth in FY25, citing slower expansion in chip-on-wafer-on-substrate (CoWoS) capacity allocation. \n“We expect ASIC revenue growth to fall to 23% y-o-y in FY25e, despite the addition of two new customers, given slower growth in chip-on-wafer-on-substrate (CoWoS) capacity allocation,” said the bank.\nHSBC’s FY25 ASIC revenue estimate of $10 billion is 5% below consensus, highlighting challenges in maintaining momentum relative to competitors like NVIDIA (NASDAQ:NVDA) and AMD (NASDAQ:AMD), whose AI GPU revenues are projected to grow at rates of 139% and 124%, respectively.\nDespite anticipated upgrades in Broadcom’s AI switch product line, including the transition to the higher-priced Tomahawk 5, HSBC sees minimal FY25 upside. \nEven under a bullish scenario where Tomahawk 5 comprises 30% of the product mix, HSBC says the potential earnings per share (EPS) boost is estimated at just 3%.\nLooking ahead to FY26, HSBC flags risks, including declining momentum from VMware (NYSE:VMW), acquired in 2023, and a potential loss of wireless market share due to Apple (NASDAQ:AAPL) possibly developing Wi-Fi modules in-house.\nValuation also remains a concern for HSBC. They note that Broadcom trades at 27x FY25 earnings, a premium to its historical 18x multiple and higher than peers NVIDIA and AMD, despite HSBC projecting slower AI revenue growth.\nWhile HSBC acknowledges upside risks, such as faster-than-expected growth in custom silicon or a strong VMware ramp-up, the firm concludes that Broadcom’s current risk-reward profile is less attractive, justifying its cautious stance.\nRelated Articles\nBroadcom initiated at Hold by HSBC\nADM sees challenges continuing into 2025, focus on cost controls\nJefferies upgrade supermarket chain Kroger to 'buy\"","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":0},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.3","shortVersion":"4.29.3","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2488952922"}