April 23, 2024

Justin Sullivan

In our prior evaluation of Broadcom Inc. (NASDAQ:AVGO), we centered on its semiconductor enterprise phase, emphasizing its strong progress propelled by Networking, pushed by swift product improvement within the realm of AI. Moreover, we highlighted constructive traits in different segments comparable to Storage, Wi-fi, and

Broadcom High Semiconductor Sub-segments ($ mln)

2023 (Our Earlier Forecast)

2023 (Precise)

2024 (Our Earlier Forecast)

Networking

10,969

10,934

13,243

Development (YoY %)

21.4%

21.0%

20.7%

Storage

6,133

4,872

7,246

Development (YoY %)

39.7%

11.0%

18.1%

Wi-fi

7,349

7,337

8,386

Development (YoY %)

-1.8%

-2.0%

14.1%

Broadband

4,606

4,183

5,081

Development (YoY %)

18.9%

8.0%

10.3%

Complete Semiconductor Section (Excluding Industrial)

29,057

27,220

33,956

Development (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

Development %

21.2%

57.1%

22.2%

22.2%

Silicon Photonics

1,039

1,651

2,077

2,613

Development %

25.80%

58.9%

25.80%

25.80%

Customized ASICs

3,000

4,876

7,448

8,453

Development %

33.33%

62.54%

52.74%

13.50%

Embedded Processors

2,731

2,955

3,197

3,459

Development %

8.20%

8.20%

8.20%

8.20%

Complete Broadcom Networking

10,934

16,024

18,991

22,185

Development %

21.0%

46.6%

18.5%

16.8%

RF Development Forecast

2024F

2025F

2026F

2027F

5G Smartphone Adoption Charge

66%

71%

77%

83%

5G Adoption Charge Improve

4.9%

5.3%

5.7%

6.2%

5G Content material Improve Issue

2.2

2.2

2.2

2.2

RF Development Charge Due To 5G Improve (‘a’)

5.7%

6.1%

6.6%

7.1%

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

-2.70%

-2.20%

-1.70%

-3.80%

Complete RF Development (‘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

Development %

21.3%

22.4%

17.9%

14.3%

VMWare Synergies

1,814

1,814

1,814

1,814

Complete VMWare

12,000

17,692

21,244

26,803

30,381

Development %

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 (Programs 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

Development %

-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

Development %

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

Development %

5.8%

-8.7%

5.8%

5.8%

5.8%

5.8%

5.8%

Virtualization (Complete VMWare)

12,000

17,692

21,244

26,803

30,381

Development %

47.4%

20.1%

26.2%

13.3%

Complete Infrastructure Software program

7,385

7,637

20,295

26,719

31,087

37,559

42,159

Development %

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%

Internet Earnings

39.3%

25.1%

Minority Pursuits

0.0%

0.0%

Internet Earnings To Shareholders

39.3%

25.1%

Different Complete Earnings

0.0%

-0.8%

Complete Complete Earnings To Shareholders

39.3%

24.2%

Internet 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

Complete 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%

Complete Mixed R&D Bills

2,737

4,035

4,845

6,113

6,929

Complete 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%

Internet Margin

24.54%

34.62%

39.31%

26.62%

27.96%

24.59%

26.60%

27.68%