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Broadcom (AVGO) to Report Q2 Earnings: What's in the Cards?

Broadcom AVGO is set to report its second-quarter fiscal 2023 results on Jun 1.

For the quarter, Broadcom expects revenues of nearly $8.7 billion, up 7.4% year over year.

The Zacks Consensus Estimate for revenues is currently pegged at $8.71 billion, suggesting growth of 7.5% from the year-ago quarter’s reported figure.

The Zacks Consensus Estimate for earnings has remained steady at $10.13 per share in the past 30 days, indicating an 11.69% growth from the figure reported in the year-ago quarter.

Broadcom Inc. Price and EPS Surprise

 

Broadcom Inc. Price and EPS Surprise
Broadcom Inc. Price and EPS Surprise

Broadcom Inc. price-eps-surprise | Broadcom Inc. Quote

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Broadcom’s earnings beat the Zacks Consensus Estimate in all the trailing four quarters, the average earnings surprise being 2.14%.

Let’s see how things have shaped up for Broadcom prior to this announcement:

Factors to Consider

Broadcom’s top-line growth is expected to have benefited from strong demand for its networking solutions that includes Tomahawk and Jericho portfolio. The strong adoption of Tomahawk 5 for data center switching by hyperscalers is expected to have driven top-line growth in the to-be-reported quarter.

Continued investment in new generation ethernet fabric and generative AI are expected to have accelerated Broadcom’s business at hyperscalers. It expects networking revenues to be strong and increase about 20% year over year in the fiscal second quarter.

Continued strong adoption of its next-generation MegaRAID and storage adapters is expected to have driven Broadcom’s storage connectivity revenues in the to-be-reported quarter. Broadcom expects server storage connectivity revenues to increase to 20% year over year.

The robust adoption of Wi-Fi 6 and Wi-Fi 6E for access gateways, courtesy of solid demand from telcos of 10G PON and cable operators of DOCSIS 3.1, is expected to have contributed to revenue growth across the broadband end market in the fiscal second quarter. Broadband revenues are expected to grow 10% on a year-over-year basis.

Acceleration in generative AI deployment and an expanding product portfolio is expected to have driven top-line growth.

What Our Model Indicates

Per the Zacks model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.

Broadcom has an Earnings ESP of 0.00% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks to Consider

Here are a few companies worth considering, as our model shows that these too have the right combination of elements to beat on earnings in their upcoming releases:

Zscaler ZS has an Earnings ESP of +4.47% and carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Zscaler is likely to release its third-quarter 2023 results on Jun 1. ZS shares have increased 16.7% year to date compared with the Zacks Computer & Technology sector’s rise of 31.4%.

C3.ai AI currently has an Earnings ESP of +6.67% and a Zacks Rank #3.

AI shares have gained 194.3% year to date. C3.ai is set to report its fourth-quarter fiscal 2023 results on May 31.

Jabil JBL has an Earnings ESP of +0.43% and a Zacks Rank #3.

JBL shares have increased 34.2% year to date. Jabil is set to report its third-quarter fiscal 2023 results on Jun 15.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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Jabil, Inc. (JBL) : Free Stock Analysis Report

Broadcom Inc. (AVGO) : Free Stock Analysis Report

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Zscaler, Inc. (ZS) : Free Stock Analysis Report

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Zacks Investment Research