Is this U.S.-China selloff a buy? A top Wall Street voice weighs in
Investing.com - Bernstein SocGen Group has reiterated an Outperform rating and $400 price target on Broadcom Limited (NASDAQ:AVGO), citing strong compute demand and confidence in the company’s growth trajectory. The target represents significant upside from the current price of $336.41, with InvestingPro data showing 26 analysts have recently revised their earnings estimates upward.
The firm highlighted insights from a virtual meeting with Broadcom’s CEO and CFO, noting that hyperscalers and frontier LLM developers are experiencing exponentially growing compute needs, which explains recent deals between Nvidia, AMD, and OpenAI. This aligns with Broadcom’s impressive 28.01% revenue growth over the last twelve months, supported by industry-leading gross profit margins of 77.19%.
Broadcom executives expressed high confidence in achieving growth targets, stating that the $90 billion 2030 target is "easily achievable" from just four current customers, with potential to reach $120 billion from these relationships alone. InvestingPro analysis indicates strong financial health with an overall score of "GREAT," suggesting robust fundamentals to support these ambitious targets.
In the near term, CEO Hock Tan reiterated confidence in the timing of $10 billion in OpenAI revenue expected in the third quarter of 2026, adding that additional orders from OpenAI are "highly likely."
Bernstein believes Broadcom’s strong artificial intelligence trajectory in 2025 will accelerate into 2026, supported by software offerings, cash deployment strategies, and what the firm described as "superb margins and FCF."
In other recent news, Cisco Systems has introduced its Silicon One P200 chip and 8223 routing systems, aiming to enhance data transfer capabilities in AI data centers. This new technology directly challenges Broadcom in the AI networking market by offering smaller components specifically designed for AI training processes. Meanwhile, Broadcom has maintained its Overweight rating from KeyBanc, which anticipates strong earnings and guidance due to high demand in AI networking and application-specific integrated circuits. Mizuho has also reiterated its Outperform rating for Broadcom, highlighting its strength in AI custom silicon and addressing investor concerns about a significant $10 billion deal with a customer believed to be OpenAI. Additionally, Broadcom has achieved a milestone in its Co-Packaged Optics technology, reporting one million cumulative 400G equivalent port device hours without disruptions at Meta. This technology reportedly reduces optics power consumption by 65% compared to traditional solutions. These developments reflect ongoing advancements and strategic moves within the AI technology sector.
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