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 ...

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.

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.