Automotive Revenues Soar 38% to $1.3B as Valuation Reflects AI Pivot
AVGO•After a 59% surge over three months, the stock trades about 18% below its 52-week high as handset demand cools in China. Automotive segment revenue hit a record $1.3 billion, up 38% year-over-year, while a 23.8 P/E and 5.3 P/S multiple reflect a pivot to AI, data centers and custom silicon.
1. Stock Performance and Valuation
Over the past three months the stock surged 59%, yet it remains about 18% below its 52-week high. Its price-to-earnings ratio of 23.8 aligns with the S&P 500’s 24.1 while a 5.3 price-to-sales multiple exceeds the market’s 3.2, highlighting a premium on future growth expectations.
2. Legacy Handset Business Under Pressure
Handset revenue is under strain as phone makers in China reduce build plans due to memory chip market dynamics. Management expects Chinese handset revenue to reach a bottom in the third quarter, indicating a near-term trough in its core smartphone business.
3. Diversification into Automotives and AI
The automotive segment delivered record quarterly revenues of $1.3 billion, up 38% year-over-year, driven by Snapdragon Digital Chassis adoption in new vehicles. The company is also expanding into robotics, PCs and large data centers and will begin custom silicon shipments with a leading hyperscaler later this year, opening a new growth avenue.
