John Zechner Broadcom Corp. BRCM-Q DON'T BUY Jun 28, 2024

Broadcom re-rated like all AI names, trading at 14x PE to start the year and 21x (vs. peers' 25-29x). Yesterday, they raised guidance from 10% AI exposure to 25% or more in 2024. A huge move. Has long owned this. Down 6% today, which is a gift.

Down 6% today, but up 4% yesterday to hit a 42-week high. They are clearly shifting to AI, a positive. They have a solid base to move from. This is a lot cheaper than Nvidia. Likes to own this. Buy it on sale. They beat EPS.

Prefers this to Nvidia, because its valuation is a lot more reasonable.

Good business with steady compounding ability. Asset light business. High cash flow. Actively buying back shares. Paying steady dividend. Returns on invested capital in 30-50% range. Not founder led and founder owned, but very strong business. Would recommend holding as business is able to compound. Very good long term hold. 

It reports next week. He wants to see around 5% revenue and earnings growth with demand growing as margins hold steady. Watch for guidance about data centre demand. A great way ex-Nividia to play AI. 

Recent market sell-off creating buying opportunity. Earnings have been strong, and getting better. A.I. cycle just beginning to start. Fundamental story appears to be getting better (earnings etc.) 

Fantastic company. Stock performance has been incredible the past 10 years. Mistake has only been to sell shares. Would recommend buying and/or holding.