July 24, 2024

Justin Sullivan

In our prior evaluation of Broadcom Inc. (NASDAQ:AVGO), we centered on its semiconductor enterprise section, emphasizing its strong development propelled by Networking, pushed by swift product growth within the realm of AI. Moreover, we highlighted optimistic developments in different segments equivalent to Storage, Wi-fi, and

Broadcom Prime Semiconductor Sub-segments ($ mln)

2023 (Our Earlier Forecast)

2023 (Precise)

2024 (Our Earlier Forecast)

Networking

10,969

10,934

13,243

Progress (YoY %)

21.4%

21.0%

20.7%

Storage

6,133

4,872

7,246

Progress (YoY %)

39.7%

11.0%

18.1%

Wi-fi

7,349

7,337

8,386

Progress (YoY %)

-1.8%

-2.0%

14.1%

Broadband

4,606

4,183

5,081

Progress (YoY %)

18.9%

8.0%

10.3%

Whole Semiconductor Section (Excluding Industrial)

29,057

27,220

33,956

Progress (YoY %)

17.2%

9.8%

16.9%

AI-related Income

2023

Semiconductor Section Income ($ mln)

28,182

Networking Sub-segment Income ($ mln)

10,934

AI-related Income below Semiconductor Section (%)

20.0%

AI-related Income below Networking Sub-Section (%)

51.5%

Broadcom Networking Sub-Section Projection ($ mln)

2023E

2024F

2025F

2026F

Ethernet Change Chip

4,164

6,542

6,269

7,660

Progress %

21.2%

57.1%

22.2%

22.2%

Silicon Photonics

1,039

1,651

2,077

2,613

Progress %

25.80%

58.9%

25.80%

25.80%

Customized ASICs

3,000

4,876

7,448

8,453

Progress %

33.33%

62.54%

52.74%

13.50%

Embedded Processors

2,731

2,955

3,197

3,459

Progress %

8.20%

8.20%

8.20%

8.20%

Whole Broadcom Networking

10,934

16,024

18,991

22,185

Progress %

21.0%

46.6%

18.5%

16.8%

RF Progress Forecast

2024F

2025F

2026F

2027F

5G Smartphone Adoption Charge

66%

71%

77%

83%

5G Adoption Charge Enhance

4.9%

5.3%

5.7%

6.2%

5G Content material Enhance Issue

2.2

2.2

2.2

2.2

RF Progress Charge Due To 5G Enhance (‘a’)

5.7%

6.1%

6.6%

7.1%

Smartphone Market Unit Cargo Progress Charge % (‘b’)

-2.70%

-2.20%

-1.70%

-3.80%

Whole RF Progress (‘c’)

2.80%

3.77%

4.78%

3.05%

VMWare Income Projection ($ bln)

2024F

2025F

2026F

2027F

2028F

VMWare

12,000

15,878

19,430

24,989

28,567

Progress %

21.3%

22.4%

17.9%

14.3%

VMWare Synergies

1,814

1,814

1,814

1,814

Whole VMWare

12,000

17,692

21,244

26,803

30,381

Progress %

47.4%

20.1%

26.2%

13.3%

Mainframe & Distributed Software program and Cost Safety (CA Applied sciences)

Market CAGR

2023 Market Dimension ($ bln)

% Weight

Mainframe Software program and Cost Safety (Techniques Infrastructure Software program)

1.8%

147.80

35.2%

Distributed Software program (Enterprise Software program)

6.6%

271.77

64.8%

Weighted Common CAGR

4.89%

419.57

100.0%

Infrastructure Software program Section ($ bln)

2022

2023E

2024F

2025F

2026F

2027F

2028F

Mainframe & Distributed Software program and Cost Safety (‘CA’)

3,356

3,408

3,574

3,749

3,932

4,125

4,326

Progress %

-2.4%

1.6%

4.9%

4.9%

4.9%

4.9%

4.9%

Symantec Cybersecurity (Symantec)

2,201

2,560

2,954

3,409

3,934

4,540

5,239

Progress %

15.80%

16.30%

15.40%

15.40%

15.40%

15.40%

15.40%

FC SAN (Brocade)

1,828

1,669

1,766

1,868

1,977

2,091

2,213

Progress %

5.8%

-8.7%

5.8%

5.8%

5.8%

5.8%

5.8%

Virtualization (Whole VMWare)

12,000

17,692

21,244

26,803

30,381

Progress %

47.4%

20.1%

26.2%

13.3%

Whole Infrastructure Software program

7,385

7,637

20,295

26,719

31,087

37,559

42,159

Progress %

4.5%

3.4%

165.7%

31.7%

16.3%

20.8%

12.2%

Expense Evaluation (% of Income)

2023 Precise

Our Earlier 2023 Forecast

COGS (Excluding D&A)

15.2%

9.9%

Depreciation & Amortization

10.7%

12.4%

Gross Revenue

74.1%

77.7%

Analysis And Improvement

14.7%

17.5%

Promoting, Common And Administrative

4.4%

17.5%

Different Bills (Earnings)

9.1%

10.8%

Earnings Earlier than Curiosity & Taxes (‘EBIT’)

45.9%

32.0%

Curiosity

-3.0%

-4.9%

Different Non-Working Bills (Earnings)

0.8%

0.0%

Earnings Earlier than Tax

42.1%

27.1%

Tax

2.8%

2.0%

Web Earnings

39.3%

25.1%

Minority Pursuits

0.0%

0.0%

Web Earnings To Shareholders

39.3%

25.1%

Different Complete Earnings

0.0%

-0.8%

Whole Complete Earnings To Shareholders

39.3%

24.2%

Web Working Earnings

2019

2020

2021

2022

2023

Semiconductor Options ($ mln)

1,989

2,125

5,486

10,356

11,830

Infrastructure Software program ($ mln)

1,455

1,889

3,033

3,869

4,377

Semiconductor Options margin (%)

11.4%

12.3%

26.9%

40.1%

42.0%

Infrastructure Software program margin (%)

28.2%

28.5%

42.9%

52.4%

57.3%

Broadcom SG&A Projection ($ mln)

2024F

2025F

2026F

2027F

2028F

Broadcom Income

39,359

44,911

50,853

57,261

64,103

SG&A % of Income

4.45%

4.45%

4.45%

4.45%

4.45%

SG&A

1,750

1,997

2,262

2,547

2,851

VMWare Income

12,000

17,692

21,244

26,803

30,381

SG&A % of Income

44%

39%

34%

29%

29%

SG&A

5,320

6,959

7,294

7,862

8,912

Whole Mixed SG&A

7,070

8,956

9,555

10,409

11,763

SG&A % of Income

13.8%

14.3%

13.3%

12.4%

12.4%

Broadcom R&D Projection ($ mln)

2024F

2025F

2026F

2027F

2028F

Broadcom Income

39,359

44,911

50,853

57,261

64,103

R&D % of Income

14.67%

14.67%

14.67%

14.67%

14.67%

R&D Bills

5,772

6,586

7,458

8,398

9,401

VMWare Income

12,000

17,692

21,244

26,803

30,381

R&D % of Income

23%

23%

23%

23%

23%

Whole Mixed R&D Bills

2,737

4,035

4,845

6,113

6,929

Whole R&D

8,509

10,621

12,303

14,510

16,330

R&D % of Income

16.6%

17.0%

17.1%

17.3%

17.3%

Earnings & Margins

2021

2022

2023

2024F

2025F

2026F

2027F

2028F

Gross Margin

73.91%

75.13%

74.11%

77.33%

79.22%

75.93%

77.12%

78.13%

EBIT Margin

31.64%

43.03%

45.94%

37.93%

38.88%

36.55%

38.41%

39.33%

Web Margin

24.54%

34.62%

39.31%

26.62%

27.96%

24.59%

26.60%

27.68%