Out Fox The $treet

  Broadcom's AI business is growing rapidly but remains a small portion of its $1.2T valuation, making the stock richly priced for its current AI exposure. AI revenues are forecast to reach $5.1B in FQ3, with custom AI accelerators and networking driving growth, but overall sales growth is less impressive. Despite a $10B buyback and strong margins, future sales growth is projected below 20%, and AI's lower margins limit further profitability leverage. The stock already trades at 14x FY27 sales targets, boosted by AI growing at a 60% clip, though Broadcom appears headed higher in the short term. Broadcom Inc.  ( NASDAQ: AVGO ) ( NEOE: AVGO:CA ) is a massive technology infrastructure company, shifting the focus into AI infrastructure. The company makes promising custom AI chips for industry leaders, but the market is already pricing in a  lot of AI excitement. My investment thesis is Neutral on the stock, with the breakout prior to earnings likely dictating the stock price ...

NXP Semi. trades back below the original Qualcomm takeover price of $110. The stock has far trailed the SOXX ETF since the merger agreement in October 2016. A flood of stock buybacks in the sector due to failed mergers will lift all boats. The Chinese regulator delays provide a unique play on  NXP Semiconductors ( NXPI ) that has a long-term growth opportunity tied into a potential short-term quick gain. Investors that step in now appear set to win either way. Read the full article on Seeking Alpha.  Disclosure: Long QCOM. Please review the disclaimer page for more details. 

Qualcomm (QCOM) increased the quarterly dividend by 9% to $0.62 per share. The annual dividend yield jumps to over 4% on this hike. More importantly, this sets the wireless tech giant up for a rally as the Broadcom (AVGO) buyout comes to a head.

The CEO of Broadcom (AVGO) went on CNBC to discuss the $82 offer to buy Qualcomm (QCOM) . Depending on the day, the offer is about a 30% premium above the current price. Broadcom CEO: Our offer for Qualcomm is compelling from CNBC . As Cramer points out, Qualcomm has a plan on the table to boost FY19 profits to about $7 per share. The offer isn't that compelling if the wireless giant can achieve that growth. Do you find the offer as compelling? More research: Qualcomm: NXP Semi. Closure Is Key Disclosure: Long QCOM. Please review the disclaimer page for more details.

Qualcomm has multiple paths to a higher stock price. Elliott makes strong case for a $135 deal price and Qualcomm can probably afford to pay the higher price. Either way, the lingering NXP Semi. deal is holding back EPS growth as Qualcomm had additional path to boost EPS numbers. As the outcome of the  NXP Semi.  ( NXPI ) merger lingers on,  Qualcomm ( QCOM ) shareholders just want closure on the deal. The company has multiple paths to higher earnings, but the NXP Semi. deal must get out of the way first. Read the full article on Seeking Alpha.  Disclosure: Long QCOM. Please review the disclaimer page for more details. 

Avago provided generally bullish commentary on the business environment including China. The actual news didn't warrant the $50 collapse seen in the stock before the recent rally. The stock is exceptionally cheap even with the merger synergies with Broadcom. The recent collapse in the stock of Avago (NASDAQ: AVGO ) would suggest something other than consistent end-user demand. The semiconductor company provides a great view into general demand in the wireless handset and enterprise storage markets with a quarter that ends in July. Not to mention, the guidance factors in actual August demand form a better picture of the market than an email from Tim Cook regarding one particular handset provider for the premium market. Read the full article on Seeking Alpha. Disclosure: No positions mentioned. Please review the disclaimer page for more details.