Every Broadcom Investor Should Keep an Eye on This Number

Broadcom (NASDAQ: AVGO) has become a prominent figure in the semiconductor sector in recent years. Over the past five years, its stock price has skyrocketed, more than doubling in value by over 1,000%.

Despite this remarkable performance, it's crucial for shareholders to stay attentive to the company's ongoing financial status. A key indicator that investors should monitor is Broadcom’s free cash flow, which exceeded $19.4 billion for fiscal year 2024.

Why is Free Cash Flow Important for Broadcom Investors?

While many investors focus primarily on revenue figures, it is equally important to consider Broadcom's free cash flow. This metric represents the cash available for paying dividends, repurchasing shares, pursuing acquisitions for growth, and lowering its debt.

Companies may not have control over their stock prices; however, they can create value for shareholders through different avenues. In Broadcom's case, the company has consistently raised its annual dividends for 14 years straight. Additionally, it has allocated tens of billions toward share buybacks and made a significant acquisition by purchasing VMWare for $61 billion in November 2023.

The strong free cash flow gives Broadcom the ability to remain competitive in the semiconductor industry while also reducing some of the debt incurred from the VMWare acquisition. This financial flexibility allows shareholders to maintain patience even during the typical fluctuations of the semiconductor sector.

The semiconductor market has recently experienced unprecedented demand, largely driven by the rise of artificial intelligence (AI). If Broadcom continues to navigate this landscape effectively, it is likely to maintain strong financial performance.

Broadcom, Investors, Semiconductors