Key points:

  • Broadcom shares doubled in 2023 and rose 45% in 2024.
  • The company plans to implement a 10-for-1 stock split.
  • Morningstar’s fair value estimate projects a post-split price of $155 per share.

Broadcom stock has seen impressive growth in 2023, nearly doubling its value. This growth continued in 2024, with the share price increasing by more than 45%. This is certainly great news for shareholders.

However, for some investors, Broadcom’s share price, which exceeded $1,600, became a barrier to purchase. But a solution to this problem has been found! A few weeks ago, in its first-quarter report, Broadcom announced a 10-for-1 stock split, similar to what Nvidia did last month.

From July 15, 2024, shares of the semiconductor and software manufacturer will be traded on a split basis.

Why invest in Broadcom?

Historically, shares have posted a 25% gain over a 12-month period following a split announcement, according to Bank of America’s Investment Research Committee. Broadcom shares are up just 8% since the split was announced, leaving significant room for growth in line with historical data.

Besides potential post-split growth, there are other reasons to invest in Broadcom stock. One key factor is the company’s acquisition of VMware. This deal played a significant role in Broadcom’s 43% revenue growth in the second quarter of 2024. Broadcom CEO Hock Tan said earlier this year that the company expects VMWare revenue growth to accelerate through the end of fiscal 2024.

However, the area of ​​artificial intelligence (AI) remains the most attractive to investors. Broadcom Ethernet technologies are used in seven of the eight largest AI clusters in the world. The company forecasts its network revenue to grow 40% this year, driven largely by AI-related demand.

This makes Broadcom stock an attractive investment due to both its post-split growth potential and strong fundamentals driven by the VMware acquisition and growth in AI.

Why is the Broadcom split a unique event?

Broadcom Inc., a leading semiconductor component maker, announced a 10-for-1 stock split, a milestone for the company that hasn’t occurred since it was acquired by Avago Technologies in 2016.

The decision to split the stock comes as Broadcom’s share price has risen significantly in recent years. The company’s shares are up 31% this year and 82% over the past 12 months.

This growth is driven by several factors, including the growth of the artificial intelligence market and the company’s successful acquisition of VMware. Broadcom is a supplier of key components for AI systems, and investors are optimistic about the company’s prospects in this area.

Splitting shares will make them more accessible to a wider range of investors, which could lead to further increases in their price.

Broadcom stock split date

The split will take place after the market closes on July 12, 2024.Broadcom Inc. issued a press release providing additional details about the upcoming 10-to-1 stock split.

Investors will receive additional shares after the stock market closes on July 12. Trading of the split shares will begin after the market opens on July 15th.

It is important to note that stock splits don’t affect the company’s fundamentals. Morningstar’s fair value estimate for Broadcom stock is currently $1,550 per share. After the split it will be adjusted to $155.

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