It has been a roller coaster ride for the stock market this year amid the geopolitical war, rising inflation, and the Fed’s aggressive stance to tame inflation. Investors’ pessimism had led the tech-driven Nasdaq Composite into the correction territory. The Nasdaq 100, comprising 100 most actively traded non-financial companies listed on the Nasdaq exchange, slumped more than 20% year-to-date.
However, the sell-off has led several fundamentally sound tech stocks to trade at attractive valuations, providing the opportunity to scoop up these stocks. Amid rapid global digitalization, the growing market for advancing technologies like Artificial Intelligence (AI), the Internet of Things, and the 5G network is expected to boost tech stocks in the near future.
Broadcom Inc. (AVGO)
AVGO designs, develops, and supplies various semiconductor devices- focussing on complex digital and mixed-signal complementary metal oxide semiconductor-based devices and analog III-V-based products. The company has two segments- Semiconductor Solutions and Infrastructure Software.
On May 26, 2022, AVGO declared that it would acquire all of the outstanding shares of VMware, Inc. (VMW), a leading innovator in enterprise software. This collaboration could lead to better shareholder retention for both companies combined.
Moreover, Kirsten Spears, AVGO’s CFO, said, “We generated $4.2 billion in free cash flow and are expecting free cash flow to remain strong in the third quarter. Consistent with our commitment to return excess cash to shareholders, we returned $4.5 billion to shareholders in the quarter, including $1.7 billion of cash dividends and $2.8 billion of share repurchases.”
AVGO’s non-GAAP net revenue increased 22.6% year-over-year to $8.10 billion for the second quarter ended May 1, 2022. Its non-GAAP net income came in at $4 billion, up 34.2% year-over-year, while its non-GAAP EPS came in at $9.07, up 37% year-over-year. Also, its adjusted EBITDA came in at $5.11 billion, up 29.1% year-over-year.
For fiscal 2022, analysts expect AVGO’s revenue to be $32.88 billion, representing a 19.8% year-over-year rise. In addition, the company’s EPS is expected to increase 31.9% year-over-year to $36.95 in 2022. Also, it surpassed the consensus EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 22% to close yesterday’s trading session at $565.36.
AVGO’s POWR Ratings reflect this promising outlook. The stock has an overall A rating, which equates to a Strong Buy in our POWR Ratings system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
Also, the stock has an A grade for Growth and Quality and a B grade for Momentum and Sentiment. Within the B-rated Semiconductor & Wireless Chip industry, it is ranked #7 out of 95 stocks. Click here for the additional POWR Ratings for Value and Stability for AVGO.
Micron Technology, Inc. (MU)
MU designs, manufactures, and sells memory and storage products worldwide. The company operates through four segments: Compute and Networking Business Unit; Mobile Business Unit; Storage Business Unit; and Embedded Business Unit.
On March 29, 2022, MU’s President and CEO Sanjay Mehrotra said, “We’re leading the industry in technology across DRAM and NAND, and our product portfolio momentum is accelerating. With outstanding first-half results, Micron is on track to deliver record revenue and robust profitability in fiscal 2022.”
MU’s revenue came in at $7.79 billion for the fiscal 2022 second quarter ended March 3, 2022, up 24.9% year-over-year. Its non-GAAP net income came in at $2.44 billion, up 116.7% year-over-year. Also, its non-GAAP EPS came in at $2.14, up 118.4% year-over-year.
Analysts expect MU’s revenue to be $33.63 billion in fiscal 2022, representing a 21.4% year-over-year rise. The company’s EPS is also expected to increase 57.8% to $9.56 in 2022. It surpassed Street EPS estimates in each of the trailing four quarters. The stock closed yesterday’s trading session at $68.60.
MU’s overall B rating equates to a Buy in our POWR Ratings system. It has an A grade for Value and a B grade for Growth, Momentum, and Quality. It is ranked #10 in the Semiconductor & Wireless Chip industry. Click here to see the additional ratings for MU (Stability and Sentiment).
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AVGO shares were trading at $544.99 per share on Friday afternoon, down $11.23 (-2.02%). Year-to-date, AVGO has declined -17.54%, versus a -17.26% rise in the benchmark S&P 500 index during the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries. More...
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