저자: Zach · 외국인
요약 보기
브로드컴(AVGO)은 VMware 인수 효과로 매출이 늘었으나 반도체 본업 성장은 6%에 그쳐 밸류에이션 부담이 크다고 평가. 최근 실적(매출 124억달러, 43% 증가, 10대1 액면분할 발표) 후 주가 급등했으나 EPS는 정체. 화이트 AI 수요는 향후 1~3년 높게 유지될 것으로 보나 빅테크 투자 감소 시 주가 50% 하락 우려. 발표자는 보유 브로드컴 주식을 전량 매도하고 비자(Visa)로 교체했다고 밝힘.
다듬은 글
in today's video I'm going to give an updated look on one of my favorite dividend growth stocks broadcom ticker symbol avgo this is one of my biggest winners over the past year and a half and they just reported earnings this week the results were looked on favorably by Wall Street and the stock is up over 12% the following day on top of this they announced a 10 to1 stock split broadcom stock has absolutely crushed it over the past year and a half going from mid $500 per share all the way up to6 $79 per share this stock has rallied massively so in today's video I'm going to break down broadcom's latest quarter explain what I think about their business results and do an updated stock analysis on the company on top of that I'm going to give an updated look on my investment portfolios and explain what I'm doing with my broadcom stock the answer may surprise you the only tease I'll give is that this is going to be a significant change to my portfolio I bought broadcom less than a year and a half ago and I nearly have a 2 100% return on my investment we'll get to all of this but first let's roll the intro my name is Zach this is dividend data and you should leave a like And subscribe to the channel if you enjoy the video throughout I'll be using my stock research tool dividend dat.com we're currently running a 50% off summer sale use the promo code summer suu m m r at checkout and you'll get 50% off all right so before we get to the latest quarter let's take a look at broadcom more broadly and how the stock is done over time and if you want a full deep dive on their business I did a prior broadcom stock review video where I go into depth about all their different product categories and since then they have acquired VMware which added to their software side of the business so now it's about 50/50 software versus semiconductors so over time broadcom stock has grown earnings per share at a very rapid rate and a lot of this has been through Acquisitions Hawk tan their CEO comes from the private Equity world and he has basically turned this into a semiconductor technology private Equity business they acquire a bunch of different products and run them very profitably combine them together in their sales processes and try and leverage you know synergies and then they use those cash flows and debt a lot of the time to buy more businesses and keep adding to it over time and so far this has worked very well they've made great decisions over time the dividend has grown at a crazy rate the 10-year compound annual growth rate of the dividend is 34.55% you will not see companies at that rate however this has slowed down and it makes sense why it has slowed down and I'll explain it the 5year keger is about 14.65% now and the most recent dividend increase was 14.13% the dividend is sustainable based on free cash flow the payout ratio is 43% as of the last year and since 2019 it has been in this 45% range which is partially why the dividend growth has been slowing down the crazy growth was coming when it was in the 20% range you can see that they were building up this dividend from a very low base initially so they were having very rapid growth rates here you can see their revenue per share over time there has been a recent increase in the past few quarters that's because they just folded VMware into their business the acquisition closed so most of this increase in revenue is due to VMware and by the way they funded that acquisition with debt you can see their liabilities and assets grow from when that took place and their net debt has actually grown from $25 billion pre-acquisition to now around $64 billion so this was a highly levered acquisition but broadcom has a history of doing this in the past you can actually see this pattern debt from acquisition they pay it off over time larger debt for the next acquisition they pay it off over time debt from another acquisition they pay it off they buy another company debt goes up and then they pay it off this one will probably take a while to pay off but historically what I've Loved about broadcom is that they are a free cash flow machine free cash flow per share has grown at a 35.9 7% 10year compound annual growth rate similar to the dividend this has slowed down to that 16.59% range for 5 years but what's interesting is for 2024 free cash flow has actually been declining even with the VMware acquisition and in the prior year annual free cash flow per share only grew 6.5% so growth is slowing in the business and despite this massive rally in stock price over the past year and a half earnings per share have remained pretty flat for the Year this is nowhere close to Nvidia yet the stock price is seeing similar Euphoria for example if we look at Nvidia they are making a Kill from their AI related chips their Data Center business has just exploded look at this earnings per share growth it actually matches their stock price growth well broadcom they've gotten this price rally and valuation increase a lot of which has been due to AI semiconductor investors wanting to buy names in the space but the actual business has not seen the same earnings growth now broadcom does have an AI related part in their semiconductor business but that's only one section of their semiconductor business and it's historically not even close to the largest although it's growing to become far more significant and it is growing at a high rate but it's only part of their semiconductor business which is only part of their business overall they have an extremely large software business especially including the VMware acquisition so let's dive into the latest quarter and then also dive into this whole AI product category and see what it's really about all right so here's broadcom second quarter results for fiscal year 2024 it just came out on June 12th Revenue came in at 12.4 billion for the quarter which is up 43% from the prior year 43% that seems like Nvidia type growth but you have to remember almost all of that is from the VMware acquisition not actual growth in their semiconductor AI business and that VMware acquisition was paid for using debt they also diluted shareholders with increasing shares outstanding so that 43% number needs a hell of a lot of context non-gaap earnings per share came in at $10.96 for the second quarter which is good but if we go back to that prior chart it is pretty much flat in the past year cash from operations was $ 4.58 billion and longtime viewers know one of the things I love about broadcom's business is that they don't manufacture chips themselves so they're very low in terms of capital expenditures they don't have to invest in capital intensive manufacturing like Intel or Taiwan semiconductor similar to Nvidia they're a chip designer they have a fabulous model where they get manufactured by Third parties so they only spent $132 million in Capital expenditures which means that they had $4.44 billion in free cash flow for the quarter which is nice because this free cash flow is how they pay dividends to shareholders and pay off debt and help fund future Acquisitions this is so important to understand if you're investing in broadcom stock if it was not for this fabulous business model broadcom stock performance would probably be terrible because they would be spending billions of dollars a year in capital expenditures and they wouldn't have this cash flow to to pay growing dividends and leverage up debt to do Acquisitions and everything but because they have such strong cash flow it it puts them in this position to continue growing as a financial asset so again here if we go back to the revenue number they're expecting approximately $51 billion in 2024 and that's including the contribution from VMware which is a 42% increase year-over-year here I'll open up VMware so you can see that so here we can see for broadcom in fiscal 2023 they had $ 35.8 billion in revenue and now I brought up VMware which is the company they just acquired it used to be a publicly trade company so you can see all its financial data and VMware in 2023 had $1 13.3 billion in Revenue so if we add these together that gets you to about $51 billion in annual revenue so despite growth in their AI segment which we'll get to they are basically not growing in the rest of their business right now yet the stock price has soared hundreds of percents in a couple years so here's a quote from tan their president and CEO I like him he's had a fantastic career although he's 71 he's getting a little older oh I wonder how long he'll keep doing it broadcom's second quarter results were once again driven by AI demand and VMware revenue from our AI products was a record $3.1 billion during the quarter so only $3.1 billion is their AI business and this has been somewhat rebranded as an AI business really it's their networking business which is used in the hyperscale data center and everything where they put the AI so they're part of that equation but they're not really in the AI category that heavily he goes on to say that infrastructure software Revenue accelerated as more Enterprises adopted the VM software stack to build their own private clouds and I do kind of like vmware's business so I think that would be a good acquisition long term and they raised their 2024 guidance to that $51 billion Revenue Target so here they say that Consolidated Revenue grew 43% year-over-year to$ 122.5 billion for this quar and that includes the contribution from VMware so for this quarter it's up 12% year-over-year excluding VMware So based on that my prediction is that they'll actually eclipse this 51 billion number pretty easily they like to usually do that they like to beat and raise broadcom almost always beat Beats and raises their targets free cash flow excluding restructuring and integration in the quarter was $5.3 billion which is up 18% year-over-year so it seems like they had a little bit of one-time cost related to that I guess and then they go on to announce the 10 for one Ford stock split and I'll explain that later some people get confused about stock splits but it really doesn't change anything in terms of valuing the company it just makes the stock price cheaper but it multiplies the entire amount of shares outstanding so you actually don't own any more of the company overall and it's still valued at the same thing we'll explain that and if you're a stockholder on record as of July 11th 2024 you'll get nine additional shares of the common stock and that's for each share held after the close of Market on July July 12th but the main reason why Wall Street has been piling into the stock is the AI story so we'll dive into that I'm going to explain more of it this record $3.1 billion during the quarter oh and here you can see the breakdown of their current business in that quarter so semiconductor Solutions is $7.2 billion in revenue and infrastructure software is $5.2 billion in revenue and again a lot of this boost is from the VMware acquisition their entire semiconductor business overall only grew 6% year-over-year now again when you compare it to a real AI story like Nvidia that is not even comparable Nvidia is doing hundreds of per a year in growth and yes they have this software growth but that's from the acquisition all right so here's their investor presentation related around their AI business this has been a big marketing push because you know you got to make money in the semiconductor business and AI is where it's at so here you can see their overall semiconductor business over time 2022 is at 26 billion 28 billion and 202 three it's it's a it's a great business highly profitable it grows over time and they're in a lot of different categories so for example that business has broken up into networking Wireless Storage broadband and Industrial here this is a different presentation but it's important to I guess have you understand what their business actually does so the networking this is the one that's AI related because they feed hyperscale data centers and have different products for that so they have things like ethernet Optical interconnect routing and switching so so this is all very important stuff for servers and large data centers however it's not the AI chips that's a very important thing to note now these things are important but they're not this like crazy proprietary only broadcom can do it thing broadcom has great products but they don't have any kind of moat in my opinion like Nvidia is trying to do with their chips then their other business is server storage connectivity this is sold to private clouds and hyperscale data centers hyperscale data centers it's like a WS Microsoft Azure Google Cloud Etc then they have broadband and here's like all the different things like Wi-Fi routers cable modems Etc they have wireless chips they have a couple chips that are in the iPhone and various other products like Optical sensing inductive charging Wi-Fi Bluetooth combo chips and then they have a bunch of chips for industrial applications as well but historically networking is not the largest business of this semiconductor group however they are growing a lot and getting increased demand as I will soon explain so here in their presentation you can see that their networking segment is the one that's enabling the AI infrastructure so they're labeling this now as their AI business basically and here you can see their percentage of semiconductor Revenue by AI so in 2019 it was under 5% and stayed under 5% through 2021 then in 2022 it became 10% and in 2023 it became 15% of their semiconductor business and in 20124 they're expecting it to become 25% of their semiconductor business so this is really sign significant growth and it's becoming pretty much their largest business segment oh here we go they're actually revising that 2024 Target to 35% of semiconductor Revenue so again this is big growth they're expecting over $10 billion in the full year that's good that's really good but the big question with broadcom's AI business nvidia's AI business all these different semiconductor companies is what the demand is going to be in the years to come now my tuition is that over the next 1 to 3 years demand will probably stay very high at least at this level and likely increase at least for the next year or two and by increase increase at a high rate however beyond that I am personally concerned that demand may drop off and the reason for that is all of the buying demand is largely coming from Big Tech that's Amazon with AWS Microsoft with Microsoft Azure Google with Google cloud and my concern is that spending at any time could decline if they don't feel like they're getting a good return on their investment and they feel like they already have enough AI related compute to compete so that is the number one question when you're analyzing AI semiconductor stocks is what you think this long-term demand path is going to be with this massive increase in broadcom stock price it is now valued at over $778 billion and personally I think we're getting into an overvalued or more risky territory with the stock in my analysis it's very likely that it will continue to stay at this price or go up in the short term and by short term one to two years however I do worry about the longterm with a lot of semiconductor stocks that have increased massively from AI investor demand especially if they don't reflect it in the earnings yet it's one thing for NVIDIA their earnings have been insane over the past couple years but there's still even questions about long-term demand levels with Nvidia yes next 1 to 3 years they're going to crush it but beyond that if earnings drop this stock will fall 50% and if that happens then I can't imagine what's going to happen to broadcom stock at that time now in terms of the real business economics broadcom is in a much better position in terms of their diversification so they have all these different product categories and it's a great business overall but my big problem right now is the valuation and this is ironic because broadcom was historically always an undervalued company in my opinion I bought the stock in early 2023 and if we go to my dividend portfolio you can see that I have 11.29 shares at a cost per share of $562 so this is just under $119,000 total value and a 198% total return so this is my second biggest winner in this portfolio next to Exxon Mobile which was a fantastic steal when I bought that and guys I may have just made a big move I decided to sell all of my broadcom stock and I have chosen to re invest all of those gains into Visa now let me update my portfolio and I'll give you a brief explanation why all right do you notice the change look what's at number two now Visa as I have predicted in the prior videos I wanted to move it up the chart I put almost all of that money into Visa stock there's about $500 or so of more value I need to buy and this is my long-term dividend grow stock portfolio if we clear it you can see all my portfolios over here total value $330,000 63% Total return and now my top three positions are pretty securely Microsoft visa and Tesla across all my accounts and I feel pretty good about that over the next decade so I am liking my core Holdings now why did I buy Visa I'm not going to give a full update right now I just made a video a couple weeks ago analyzing Visa stock and saying why it's my top dividend grow stock you can buy however in my upcoming portfolio update video which will be at the end of June so subscribe if you want to watch that I will explain much more of my logic of why I sold broadcom and decided to buy Visa and there may be more portfolio composition changes over time so if you want to research stocks just like I do then sign up for dividend dat.com right now we have a 50% off sale or summer sale use the promo code summer at checkout that gets you 50% off both the monthly and annual plan and the annual plan is already discounted over $100 so this basically makes it a $200 discount so I definitely recommend picking the annual plan thank you for watching this week's episode of dividend data leave a like And subscribe to the channel and I'll see you next time
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