Tesla Inc (NASDAQ:TSLA), the electric vehicle maker owned by Elon Musk, has seen its shares decline by 22% while semiconductor maker Broadcom Inc (NASDAQ:AVGO) has rallied by 10%. This is significant because the growth in Broadcom’s shares means that it is now not far behind Tesla in terms of market capitalization.
Broadcom’s upcoming quarterly earnings report on March 7 could potentially help the company close the gap with Tesla and join the group of tech stock mega caps known as the Magnificent 7.
Analysts expect Broadcom’s revenues for the quarter to be $11.73 billion, a 31.6% increase from the same period last year. Adjusted earnings are expected to reach $6.66 billion, up 17.3% from last year, and earnings per share are forecasted to be $10.42, a 0.9% increase from the previous year.
The substantial increase in revenue is largely attributed to Broadcom’s acquisition of cloud computing leader VMWare for $69 billion, completed in October 2023. Following the acquisition, the company has been exploring ways to reduce its headcount.
Nvidia Inc (NASDAQ:NVDA), the leading chipmaker on the S&P 500, has gained 235% in the past year, compared to Broadcom’s 113%.
Nvidia is set to report its quarterly earnings after the market close on Wednesday, and high expectations have already impacted chip stocks on the main index. Nvidia’s stock is down 2%, while Broadcom is down 1.5% in early Wednesday trade.
Both Broadcom and Nvidia are fabless chipmakers that outsource their production to foundries like Taiwan Semiconductor Manufacturing (NYSE:TSM). However, Broadcom has a broader product range, with around three-quarters of its revenue coming from semiconductors and a quarter from software.
Analysts have shown favorable outlooks for Broadcom’s stock. Cantor Fitzgerald, which initiated coverage of the company in January with an Overweight rating and a $1,300 price target, reiterated its recommendation. Mizuho also increased its price target from $1,250 to $1,450 with a Buy rating. UBS analyst Timothy Arcuri raised the price target on the stock from $1,075 to $1,475, citing potential growth in Broadcom’s custom ASIC business through 2025.
If Broadcom maintains its growth trajectory, it could potentially overtake Tesla’s market capitalization in the coming months and join Nvidia as part of the Magnificent 7.
This article does not provide investment advice and all rights are reserved.
