Why is Broadcom Inc. stock underperforming the market?

Broadcom Inc. (NASDAQ: AVGO) has demonstrated robust financial performance in fiscal year 2024, with a 44% year-over-year revenue increase to $51.6 billion, driven by AI chip sales and strategic partnerships, notably the integration of VMware. AI-related revenue surged by 220% to $12.2 billion, fueled by Broadcom's AI XPUs and Ethernet networking portfolio. Although quarterly revenue slightly missed estimates at $14.05 billion versus the expected $14.09 billion, the company exceeded earnings per share (EPS) expectations, reporting $1.42 per share against the anticipated $1.38. Broadcom forecasts first-quarter revenue of approximately $14.6 billion, aligning with market expectations. Strategically, Broadcom has entered a licensing agreement with Synaptics to enhance its Edge AI strategy, projected to add at least $40 million in annualized sales and positively impact adjusted EPS. This move underscores Broadcom's commitment to expanding its footprint in the IoT and Android ecosystems. Analysts have responded positively, with many raising price targets and maintaining 'Buy' ratings, citing strong demand for AI products and a cyclical recovery in semiconductor markets. Despite challenges from increased competition, particularly from Chinese companies, and market volatility, analysts remain optimistic about Broadcom's potential for recovery and long-term success, supported by its strategic initiatives and strong market position.