Better Metaverse Stock: Broadcom vs. Meta Platforms

Broadcom (AVGO -3.17%) It’s a chip company that has grown exponentially in terms of customer relationships. These combinations led to new products, such as a built-in wi-fi hotspot AppleiPhones and AlphabetThe smart chip works.

Kind of, Meta Systems (META -4.68%) Broadcom will spend another billion dollars, according to JPMorgan artist Harlan Sur. Facebook’s parent company has been shown to use standard tools created by Broadcom to power its metaverse applications. While this deal will benefit both industries, the question for investors is: Who is the metaverse stock that holds the potential to attract top investors?

Image source: Getty Images.

Broadcom and Meta

The Broadcom and Meta alliance is the latest example of software and hardware that includes each other’s businesses. However, Broadcom has so far only invested in semiconductors. It has thrived on extensive research and development, using this research by using engineers close to the major retailers to work with its customers to develop custom chips. Now, it hopes to bring its semiconductors to the metaverse through Meta.

In addition, it entered the software industry in 2018 amid a downward spiral in the chip industry, selling CA Technologies and Symantec enterprise security. He also hopes to create a software account to earn money with the expected purchase. VMWare.

For Meta, she built her first career on the program. The company launched social media with the public through Facebook and later took to Instagram and WhatsApp. As a result, it has developed a user base of about 2.9 billion daily users on all of its sites.

However, it has forged a hardware approach to the metaverse, bought Oculus and tried to add to its suite of VR goggles. Meta has teamed up with Ray-Ban to develop smart glasses. While the Broadcom company does not directly introduce Meta to the semiconductor industry, it will be working harder with standard manufacturing equipment to strengthen its offerings.

How to compare money

Although there is a struggle for the two trees now, they continue to grow. In its second quarter (ended May 2), Broadcom had $ 8.1 billion in revenue, a 23% increase over its previous quarter. That’s more than the 19% increase so far for fiscal 2022 and the 15% increase in the last fiscal year.

Q2 results led to revenue of nearly $ 2.6 billion, a 73% increase over the same period. The industry has achieved this growth by limiting the cost of increased capital and slightly reducing operating costs.

This is better than Meta even though the end time is slightly different for the quarter. In the first quarter, Meta’s revenue increased $ 27.9 billion by 7% over Q1 2021, down from a 37% increase in revenue for 2021.

Revenue fell by 21% to less than $ 7.5 billion over the same period. An increase in the cost of income and labor costs is better than financial growth.

Broadcom’s archive is better than its parent Facebook. Many investors have wondered on Meta’s sagging chart if the price will recover any time soon. Broadcom’s revenues did not receive a share of the company, which has risen every year since Avago Technologies first introduced a dividend in 2010. Shareholders currently own $ 16.40. annually, revenue generated is about 2.8%.

The chart shows Broadcom’s price to be higher than Meta’s from the end of 2021.

AVGO or YCharts data

However, Meta offers many benefits. Broadcom supports a price -to -earnings ratio (P/E) of 29 to 15 for parent Facebook. While Broadcom has been performing more vigorously in recent months, the lower P/E ratio and previously mentioned discounts may force some customers to opt for the Meta. Plus, its $ 44 billion in funding with only $ 9 billion for Broadcom could intensify the case for parent Facebook.

Broadcom or Meta?

While the two businesses have been at a critical juncture to generate revenue from the metaverse in the long run, the path is clear with Broadcom. Broadcom’s Meta -based strategy is a company that has been proven to work with other companies. In addition, the history of income growth and increasing segregation provides a predictive path to external growth.

Of course, Facebook’s portfolio, which owns Oculus, and a large user base give it a great opportunity to be productive. However, it is in a fundamental change. While achieving his goals could lead to higher returns than Broadcom, he can’t guarantee whether or not much of his strategy will be successful. In other words, Broadcom is seen as a safer option than Meta today

JPMorgan Chase is a partner of The Ascent, a Motley Fool company. Randi Zuckerberg, former director of market development and spokesperson for Facebook and sister of Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Suzanne Frey, an officer at Alphabet, is a member of The Motley Fool’s board of directors. Will Healy has no position in any of the aforementioned archives. Motley Fool has a position and promotes Alphabet (A shares), Alphabet (C shares), Apple, and Meta Platforms, Inc. Motley Fool recommends Broadcom Ltd and VMware and recommends the following options: long March 2023 $ 120 phone to Apple and short March 2023 $ 130 phone to Apple. Motley Fool has an advertising policy.

Leave a Comment