Comparative Analysis of Broadcom and ON Semiconductor
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 5 days ago
0mins
Source: NASDAQ.COM
- Broadcom Financial Performance: In FY 2025, Broadcom's revenue reached nearly $63.9 billion, reflecting a growth rate of approximately 23.9%, with a net income of about $23.1 billion and a net margin of 36.2%, showcasing strong growth driven by demand for AI-related semiconductor solutions.
- ON Semiconductor Market Challenges: ON Semiconductor reported nearly $6.0 billion in revenue for FY 2025, a decline of 15.3% year-over-year, resulting in a net income of approximately $121 million and a net margin of 2.0%, highlighting its heavy reliance on the automotive sector amid market fluctuations.
- Financial Health Comparison: Broadcom's current ratio stands at approximately 1.7, indicating solid short-term liquidity, while ON Semiconductor boasts a high current ratio of 4.5, reflecting strong short-term debt management; however, their debt-to-equity ratios are 0.8 and 0.5 respectively, indicating different levels of financial leverage.
- Industry Outlook and Risks: Broadcom benefits from robust demand in AI and data centers, enhancing its profitability and cash flow, yet its 40% revenue concentration among top customers poses risks; ON Semiconductor faces cyclical downturns in the automotive sector, and the Synaptics acquisition introduces potential integration risks.
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Analyst Views on AVGO
Wall Street analysts forecast AVGO stock price to rise
30 Analyst Rating
29 Buy
1 Hold
0 Sell
Strong Buy
Current: 373.900
Low
370.00
Averages
457.75
High
525.00
Current: 373.900
Low
370.00
Averages
457.75
High
525.00
About AVGO
Broadcom Inc. is a global technology firm that designs, develops, and supplies a range of semiconductors, enterprise software and security solutions. The Company operates through two segments: semiconductor solutions and infrastructure software. Its semiconductor solutions segment includes all of its product lines and intellectual property (IP) licensing. It provides a variety of radio frequency semiconductor devices, wireless connectivity solutions, custom touch controllers, and inductive charging solutions for mobile applications. Its infrastructure software segment includes its private and hybrid cloud, application development and delivery, software-defined edge, application networking and security, mainframe, distributed and cybersecurity solutions, and its FC SAN business. It provides a portfolio of software solutions that enable customers to plan, develop, automate, manage and secure applications across mainframe, distributed, mobile and cloud platforms.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Apple Enters $30 Billion Chip Deal with Broadcom
- Major Partnership Agreement: Apple has entered into a chip deal valued at over $30 billion with Broadcom, where Broadcom will design and produce custom silicon components and advanced wireless connectivity technologies for Apple products, further solidifying their long-standing partnership.
- Commitment to American Manufacturing: The deal stipulates that Broadcom will manufacture over 15 billion chips in the U.S., reflecting Apple's commitment to its American Manufacturing Program (AMP) and promoting domestic manufacturing growth.
- Investment in Modern Facilities: Broadcom will invest $1.5 billion to modernize its manufacturing facilities in Fort Collins, Colorado, which not only enhances production capacity but also drives technological innovation to ensure product quality.
- Strong Market Performance: Apple's iPhone sales have remained robust, with a 47% increase in stock price over the past year, demonstrating its competitive edge in the AI market and the resilience of market demand, thereby strengthening the foundation for its collaboration with Broadcom.
See More
Analyst Downgrade Weighs on Broadcom Stock Amid AI Chip Developments
- Downgrade Impact: Analyst Hans Engel from Erste Group downgraded Broadcom's rating from buy to hold, resulting in a nearly 1% drop in the stock price during the trading session, indicating market concerns regarding its future growth potential.
- Valuation Concerns: Engel highlighted that Broadcom's price-to-sales ratio exceeds 23, and while the company has promising prospects in developing next-generation custom AI chips, such high valuations may limit upside potential, reflecting investor caution about its future performance.
- Increased Competitive Threat: The announcement by Chinese AI developer DeepSeek to create its own AI chip signifies a trend that could reduce reliance on third-party chip manufacturers like Broadcom, posing potential market challenges for the company.
- Sustained Market Demand: Despite the competitive threats, the unquenchable demand for quality AI hardware suggests that Broadcom, leveraging its industry position and technological advantages, is likely to continue performing well in the market.
See More
Analyst Downgrades Broadcom Rating, Stock Pressured
- Rating Downgrade Impact: Analyst Hans Engel from Erste Group downgraded Broadcom's rating from buy to hold, resulting in a nearly 1% drop in the stock price during the trading session, indicating market caution regarding the company's future performance.
- Valuation Concerns: Engel expressed optimism about Broadcom's role as a developer of next-generation custom AI chips; however, he raised concerns about its current price-to-sales ratio exceeding 23, suggesting that such high multiples could limit the stock's upside potential despite possible impressive growth.
- Increased Competition: The report of Chinese AI developer DeepSeek working on its proprietary AI chip highlights a trend of companies reducing reliance on third-party chip manufacturers like Broadcom, which could pose significant challenges for Broadcom and its peers in the future.
- Sustained Market Demand: Despite competitive pressures, the unquenchable demand for quality AI hardware suggests that Broadcom is likely to continue performing well, with analysts remaining bullish on the company's future prospects.
See More
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- Tech Stock Investment Strategy: While tech, growth, and AI stocks have performed exceptionally well, investors should maintain a long-term perspective to avoid over-optimism from short-term gains, ensuring the robustness of their investment strategies.
- Vanguard Dividend Appreciation ETF Advantage: The Vanguard Dividend Appreciation ETF (VIG) offers a solid long-term investment opportunity by selecting blue-chip stocks with over 10 years of consecutive growth, combining income and growth strategies, particularly beneficial during economic fluctuations.
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- Portfolio Advantage: The Vanguard Dividend Appreciation ETF combines high-tech and defensive stock allocations through a 'barbell' portfolio weighting, aiming to provide investors with a smoother long-term return, although its 1.5% yield may not attract income-seeking investors.
- Market Performance Review: Following three consecutive years of over 16% gains in the S&P 500, the market is on track for similar growth in 2026, indicating strong long-term growth potential, particularly for investors overweight in tech and artificial intelligence sectors who may see even higher returns.
- Investment Strategy Analysis: This ETF selects from large-cap dividend-paying companies with over 10 years of consecutive dividend growth; while its selection strategy suggests a conservative approach, its market-cap weighting allows larger companies to have greater influence, with top holdings including Broadcom, Apple, and Microsoft, accounting for a combined weight of 14%.
- Long-Term Return Expectations: Since its inception, the fund has produced an average annual return of over 10%, and if this rate continues, a $500 monthly investment could grow to nearly $400,000 in 20 years and $1.1 million in 30 years, showcasing its significant potential for wealth accumulation.
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- Short Position Strategy: Michael Burry has recently opened a series of short positions against companies in the AI infrastructure sector, indicating his skepticism about the sustainability of the industry amid a surge in AI spending.
- ETF Investment Analysis: As of June 30, Burry was short the iShares Semiconductor ETF (SOXX), which focuses on investing in semiconductor companies related to AI, suggesting he believes the entire semiconductor industry is overvalued and may face a correction.
- Industry Performance Comparison: The iShares Semiconductor ETF has delivered a compound annual return of 14.9% since its inception in 2001, significantly outperforming the S&P 500's 9%, but Burry argues that its P/E ratio of 74.3 is notably higher than that of the Nasdaq-100, indicating a potential market bubble.
- Spending Cut Trends: A recent UBS survey indicates that around 60% of businesses are curbing their AI spending, which could negatively impact AI companies and their customers, subsequently affecting the semiconductor industry, potentially benefiting Burry's short strategy.
See More
Apple Enters $30 Billion Chip Deal with Broadcom
- Major Partnership Agreement: Apple has entered into a chip deal valued at over $30 billion with Broadcom, where Broadcom will design and produce custom silicon components and advanced wireless connectivity technologies for Apple products, further solidifying their long-standing partnership.
- Commitment to American Manufacturing: The deal stipulates that Broadcom will manufacture over 15 billion chips in the U.S., reflecting Apple's commitment to its American Manufacturing Program (AMP) and promoting domestic manufacturing growth.
- Investment in Modern Facilities: Broadcom will invest $1.5 billion to modernize its manufacturing facilities in Fort Collins, Colorado, which not only enhances production capacity but also drives technological innovation to ensure product quality.
- Strong Market Performance: Apple's iPhone sales have remained robust, with a 47% increase in stock price over the past year, demonstrating its competitive edge in the AI market and the resilience of market demand, thereby strengthening the foundation for its collaboration with Broadcom.
See More
Analyst Downgrade Weighs on Broadcom Stock Amid AI Chip Developments
- Downgrade Impact: Analyst Hans Engel from Erste Group downgraded Broadcom's rating from buy to hold, resulting in a nearly 1% drop in the stock price during the trading session, indicating market concerns regarding its future growth potential.
- Valuation Concerns: Engel highlighted that Broadcom's price-to-sales ratio exceeds 23, and while the company has promising prospects in developing next-generation custom AI chips, such high valuations may limit upside potential, reflecting investor caution about its future performance.
- Increased Competitive Threat: The announcement by Chinese AI developer DeepSeek to create its own AI chip signifies a trend that could reduce reliance on third-party chip manufacturers like Broadcom, posing potential market challenges for the company.
- Sustained Market Demand: Despite the competitive threats, the unquenchable demand for quality AI hardware suggests that Broadcom, leveraging its industry position and technological advantages, is likely to continue performing well in the market.
See More
Analyst Downgrades Broadcom Rating, Stock Pressured
- Rating Downgrade Impact: Analyst Hans Engel from Erste Group downgraded Broadcom's rating from buy to hold, resulting in a nearly 1% drop in the stock price during the trading session, indicating market caution regarding the company's future performance.
- Valuation Concerns: Engel expressed optimism about Broadcom's role as a developer of next-generation custom AI chips; however, he raised concerns about its current price-to-sales ratio exceeding 23, suggesting that such high multiples could limit the stock's upside potential despite possible impressive growth.
- Increased Competition: The report of Chinese AI developer DeepSeek working on its proprietary AI chip highlights a trend of companies reducing reliance on third-party chip manufacturers like Broadcom, which could pose significant challenges for Broadcom and its peers in the future.
- Sustained Market Demand: Despite competitive pressures, the unquenchable demand for quality AI hardware suggests that Broadcom is likely to continue performing well, with analysts remaining bullish on the company's future prospects.
See More
Investors Experience One of the Longest Bull Markets in History
- Strong Market Performance: The S&P 500 has achieved over 16% gains for three consecutive years, and it is on track to do so again in 2026, reflecting robust market recovery and heightened investor confidence.
- Tech Stock Investment Strategy: While tech, growth, and AI stocks have performed exceptionally well, investors should maintain a long-term perspective to avoid over-optimism from short-term gains, ensuring the robustness of their investment strategies.
- Vanguard Dividend Appreciation ETF Advantage: The Vanguard Dividend Appreciation ETF (VIG) offers a solid long-term investment opportunity by selecting blue-chip stocks with over 10 years of consecutive growth, combining income and growth strategies, particularly beneficial during economic fluctuations.
- Long-Term Return Potential: This ETF has produced an average annual return of over 10% since inception, suggesting that a $500 monthly investment could grow to nearly $400,000 in 20 years and $1.1 million in 30 years, highlighting its significant wealth accumulation potential.
See More
Vanguard Dividend Appreciation ETF: A Long-Term Wealth-Building Vehicle
- Portfolio Advantage: The Vanguard Dividend Appreciation ETF combines high-tech and defensive stock allocations through a 'barbell' portfolio weighting, aiming to provide investors with a smoother long-term return, although its 1.5% yield may not attract income-seeking investors.
- Market Performance Review: Following three consecutive years of over 16% gains in the S&P 500, the market is on track for similar growth in 2026, indicating strong long-term growth potential, particularly for investors overweight in tech and artificial intelligence sectors who may see even higher returns.
- Investment Strategy Analysis: This ETF selects from large-cap dividend-paying companies with over 10 years of consecutive dividend growth; while its selection strategy suggests a conservative approach, its market-cap weighting allows larger companies to have greater influence, with top holdings including Broadcom, Apple, and Microsoft, accounting for a combined weight of 14%.
- Long-Term Return Expectations: Since its inception, the fund has produced an average annual return of over 10%, and if this rate continues, a $500 monthly investment could grow to nearly $400,000 in 20 years and $1.1 million in 30 years, showcasing its significant potential for wealth accumulation.
See More
Michael Burry Shorts AI Infrastructure Stocks Amid Skepticism
- Short Position Strategy: Michael Burry has recently opened a series of short positions against companies in the AI infrastructure sector, indicating his skepticism about the sustainability of the industry amid a surge in AI spending.
- ETF Investment Analysis: As of June 30, Burry was short the iShares Semiconductor ETF (SOXX), which focuses on investing in semiconductor companies related to AI, suggesting he believes the entire semiconductor industry is overvalued and may face a correction.
- Industry Performance Comparison: The iShares Semiconductor ETF has delivered a compound annual return of 14.9% since its inception in 2001, significantly outperforming the S&P 500's 9%, but Burry argues that its P/E ratio of 74.3 is notably higher than that of the Nasdaq-100, indicating a potential market bubble.
- Spending Cut Trends: A recent UBS survey indicates that around 60% of businesses are curbing their AI spending, which could negatively impact AI companies and their customers, subsequently affecting the semiconductor industry, potentially benefiting Burry's short strategy.
See More
