Broadcom stock holds Buy rating, $265 target at TD Cowen

On Friday, TD Cowen maintained a positive stance on Broadcom Limited (NASDAQ:AVGO) shares, reiterating a Buy rating and a price target of $265.00. The firm’s analyst, Joshua Buchalter, highlighted the company’s performance in artificial intelligence (AI) revenue as a key factor for the favorable outlook. With impressive revenue growth of 40.3% over the last twelve months and a substantial market capitalization of $894.59 billion, Broadcom’s recent announcement of adding two more custom accelerator programs was seen as a significant development, exceeding market expectations.

Buchalter expressed confidence in Broadcom’s strategic choices, noting that while the new accelerator programs might not all reach the scale of their existing TPU program, the company is selective in undertaking projects that have potential for growth. According to InvestingPro, Broadcom maintains impressive gross profit margins of 76.26% and is expected to grow revenue by 19% in FY2025. He also pointed out that the demand for AI infrastructure remains robust in the near term, which supports the company’s growth prospects.

Broadcom’s AI revenue beat and the addition of two custom accelerator customers have been perceived as a positive signal by investors, suggesting a strong position in the competitive tech market. The company’s ability to secure new projects and drive revenue in key areas like AI indicates a solid business strategy. InvestingPro analysis suggests the stock is currently trading above its Fair Value, with 18 additional ProTips available for subscribers.

The analyst’s commentary underscores the importance of AI revenue to Broadcom’s overall financial health and the market’s confidence in the company’s ability to scale its operations with new customers. With a sustained Buy rating and a stable price target, TD Cowen’s outlook on Broadcom remains optimistic.

Broadcom’s stock performance and future growth are closely tied to the company’s success in expanding its AI capabilities and securing additional custom accelerator programs. The firm’s current valuation reflects these factors and the market’s expectation of continued progress in these areas.

In other recent news, Broadcom Limited has reported robust financial results, showcasing strong earnings and revenue figures that have exceeded Wall Street’s expectations. Cantor Fitzgerald highlighted that Broadcom’s revenue reached $29.8 billion, with earnings per share (EPS) of $3.16, surpassing the consensus estimates of $29.3 billion and an EPS of $3.01. The company’s AI Semiconductor segment, in particular, generated $4.1 billion in revenue, marking a 77% year-over-year increase. Broadcom’s guidance for the upcoming quarter projects AI revenue to grow to $4.4 billion, which would represent a 7% quarter-over-quarter increase.

Truist Securities has increased its price target for Broadcom to $267, citing the company’s promising position in the AI sector as a key growth driver. Meanwhile, Wolfe Research has maintained a Peer Perform rating, noting that while Broadcom’s AI business deserves a premium valuation, the rest of its operations continue to exhibit slow growth. Citi analysts have reiterated a Buy rating with a $220 target, emphasizing the strength of Broadcom’s AI semiconductor business in balancing potential risks such as sanctions on Bytedance and the loss of RF share at Apple (NASDAQ:AAPL).

Mizuho (NYSE:MFG) Securities has maintained an Outperform rating but adjusted the price target to $250, reflecting Broadcom’s strong AI sector developments and positive guidance for the April quarter. The company has also made significant strides with new AI engagements and is focusing on advancing its AI XPU technology. Overall, Broadcom’s recent financial performance and strategic focus on AI appear to be critical factors in shaping its future growth trajectory.

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