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Investing.com -- Shares of Broadcom Inc. (NASDAQ:AVGO) climbed 5.5% in premarket trading after the semiconductor company announced a new share buyback program authorizing the repurchase of up to $10 billion of its shares.
The initiative is seen by analysts as a strong vote of confidence, particularly in the face of recent concerns over tariff impacts on the industry.
The buyback program is equivalent to approximately 1.4% of Broadcom's current market value, as per Bloomberg's compiled data. Despite a dividend yield of 1.5%, Broadcom's stock has experienced a 34% decline this year.
The company's CEO, Hock Tan, underscored the strength of Broadcom's diversified portfolio in semiconductors and infrastructure software, emphasizing its pivotal role in mission-critical infrastructure and the burgeoning generative AI sector.
Jordan Klein of Mizuho (NYSE:MFG) Securities commented on the buyback, stating, "The size of the buyback might not be a major needle mover, but it sure does send a positive message to investors."
He also noted that Broadcom could commence the buyback immediately and front-load purchases if desired. Klein added that while a larger buyback was feasible, CEO Hock Tan likely prefers to maintain reserve funds for potential mergers and acquisitions in the future.
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