Broadcom (NASDAQ:AVGO) is an integral link in the technology hardware supply chain. Other companies may get all the glory, but investors shouldn’t overlook Broadcom stock, which could soar if the company beats Wall Street’s expectations. We give it a “B” grade today.

Don’t evaluate Broadcom using traditional valuation metrics. Price-to-earnings ratios can be misleading because they don’t give the full picture. Look at the company’s achievements and growth and prepare for an upcoming event that should keep critics and short sellers at bay.

Broadcom’s Grand Slam Quarter

It feels like yesterday Broadcom reported second-quarter fiscal 2024 results that could best be described as a grand slam. First off, Broadcom announced a quarterly cash dividend of $5.25 per share. That’s pretty generous when the stock is around $140 or $150.

In addition, Broadcom’s revenue increased 43% year over year to $12.5 billion. The company’s AI product revenue was $3.1 billion, a quarterly record for Broadcom.

Those were the main highlights, but there’s more good news to report. Specifically, Broadcom’s adjusted EBITDA rose 31% to $7.4 billion, and the company’s free cash flow (excluding restructuring and integration in the quarter) rose 18% to $5.3 billion.

Can Broadcom possibly follow up these results with another grand slam, or at least a home run? Let’s take a look at what Wall Street wants to see in Broadcom’s next quarterly earnings release.

Setting the bar high for Broadcom

Broadcom has an excellent track record of exceeding quarterly results. People who have bet against Broadcom have repeatedly lost their shirts. However, the company will soon face another test.

Mark September 5th on your calendar, because that’s the day Broadcom will release its results for the third quarter of fiscal 2024. Wall Street experts expect Broadcom to earn $1.21 per share, which is more than what they had expected from Broadcom in recent quarters.

Since expectations are high, there is no reason to invest too much in Broadcom stock. It is wise to maintain a reasonable position size just in case high expectations lead to disappointment in Broadcom.

Still, high expectations are not necessarily a problem. For the full fiscal year 2024, Broadcom expects revenue to increase 42% year-on-year to about $51 billion.

In addition, per Barron’sJPMorgan Chase analyst Harlan Sur believes Broadcom could generate “$150 billion in cumulative AI revenue” over the next five years, so a single quarter’s results shouldn’t be the deciding factor for Broadcom.

Broadcom Stock: Stay with a High-Flyer

High expectations can be a double-edged sword. It is encouraging that Broadcom and Wall Street have high hopes for Broadcom. On the other hand, there is no reason to invest too much in Broadcom, as there is no guarantee that the next earnings report will exceed investor expectations.

One sensible solution would be to buy a small stake in Broadcom before the next quarterly figures are released. Or you could play it safe and just wait until the quarterly figures are available. Either way, Broadcom stock deserves a safe “B” grade and should be suitable for most portfolios.

At the time of publication, neither Louis Navellier nor the member of the InvestorPlace research team primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.

At the time of publication, the editor in charge did not own, directly or indirectly, any interests in the securities mentioned in this article.