Broadcom is primed for a big gain. How to trade it while protecting against risk
Jeff Kilburg, CEO of KKM Financial, breaks down how he's trading the AI-linked name.
TL;DR
- Broadcom (AVGO) is trading at a discount to its average Wall Street price target, with AI semiconductor revenue reaching $10.8 billion in the last quarter.
- The company's AI revenue is projected to reach $56 billion for the fiscal year and over $100 billion by fiscal 2027.
- Broadcom profits from AI by supplying networking components (switches) and custom AI accelerators (XPUs/TPUs) to hyperscalers.
- A proposed options strategy involves selling a put and buying a call to express a bullish view while defining risk.
- The upcoming September 2 earnings report is seen as a catalyst, with guidance on AI semiconductor trajectory being crucial.