Broadcom’s Investor Meeting Key Takeaways

Deutsche Bank provided their views on Broadcom Inc. (NASDAQ:AVGO) following their meeting with CEO Hock Tan and CFO Kirsten Spears. According to the analysts, near-term demand drivers are intact, but thorough backlog management continues. From a demand outlook perspective, management largely reiterated the same message from its most recent earnings call with no meaningful change in customer order behavior or cancellations, albeit with slightly less urgency in expedited deliveries and a continued increase in the thoughtfulness of bookings.

Despite its consistent backlog increases supported by strong secular and co-specific upgrade cycles, the company continues to “thoroughly scrub” its backlog with a goal to lower cyclical volatility in its revenues, both during an up and a down cycle.

Furthermore, while the company continues to believe that current levels of semiconductor growth is not sustainable in the long run, any type of slowdown seems more like an H2/23 or 2024 event.

From a geopolitical perspective, the company doesn’t expect to be impacted by the recent addition of China restrictions. Overall, the analysts mentioned the company remains confident in its mid-term visibility of demand and believes that its noncancellable backlog ($31 billion) with long lead times (50 weeks) combined with a judicious backlog/channel inventory management should lower its revenue volatility in an event a slowdown starts to occur.