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On Friday, Broadcom Limited (NASDAQ:AVGO), an $884 billion semiconductor powerhouse, saw its shares soar following a reaffirmed Buy rating and a steady $255.00 price target from Benchmark analysts. The semiconductor giant impressed the market with a robust earnings report, particularly in its artificial intelligence (AI) sector, which saw a significant year-over-year revenue increase. According to InvestingPro data, analyst consensus remains strongly bullish, despite the stock’s recent 10% decline over the past week.
Broadcom’s AI revenue surged to $4.1 billion in the first quarter of 2025, marking a 10% sequential growth and an impressive 77% jump compared to the same period last year. This performance exceeded the company’s own expectations, which had set an AI revenue target of $3.8 billion. The strength in Broadcom’s AI business was largely attributed to its networking segment, although XPU revenue also played a role in the overall growth. The company’s exceptional gross profit margin of 76% and overall revenue growth of 40% year-over-year underscore its operational efficiency in the high-growth AI market.
The company’s success in AI has been bolstered by its relationships with major hyperscale customers, including Google (NASDAQ:GOOGL) and Meta (NASDAQ:META). The recent addition of ByteDance to this group of clients is expected to further enhance Broadcom’s market position. Each of these tech giants is planning to deploy up to a million XPU clusters, which could represent a significant serviceable available market (SAM) for Broadcom by fiscal year 2027, estimated between $60 and $90 billion across its networking and XPU businesses.
Benchmark’s analyst highlighted Broadcom’s increased visibility in the AI market, noting the company’s potential to capitalize on improving industry fundamentals over the coming years. The analyst’s commentary also underscored the importance of Broadcom’s multi-year, multi-generational engagements with its key customers, which are anticipated to drive sustained growth and position the company favorably within the rapidly expanding AI industry.
In other recent news, Broadcom Limited reported robust financial results, surpassing Wall Street expectations with a combined revenue of $29.8 billion and earnings per share (EPS) of $3.16, as noted by Cantor Fitzgerald. These figures exceeded the consensus estimates, largely driven by the company’s strong performance in the Artificial Intelligence (AI) semiconductor segment, which saw a 77% year-over-year revenue increase. Cantor Fitzgerald maintained an Overweight rating with a $300 price target, reflecting confidence in Broadcom’s growth potential.
Truist Securities also updated their outlook, raising the price target to $267 and highlighting Broadcom’s strong demand and innovation in AI as key growth drivers. The firm noted that Broadcom’s AI initiatives could potentially expand the serviceable available market significantly by fiscal year 2027. Meanwhile, TD Cowen reiterated a Buy rating with a $265 target, emphasizing Broadcom’s strategic choices in AI revenue and custom accelerator programs as positive developments.
Citi analysts maintained a Buy rating with a $220 target, citing Broadcom’s strong AI sector performance, which is expected to constitute a significant portion of its future sales. They noted that new AI engagements should offset potential impacts from sanctions on Bytedance and loss of RF share at Apple (NASDAQ:AAPL). Wolfe Research, however, maintained a Peer Perform rating, pointing out that while Broadcom’s AI business justifies a premium, its other operations show slower growth.
Overall, Broadcom’s strategic focus on AI continues to be a central theme in analyst assessments, with multiple firms recognizing the company’s AI-driven growth prospects as a compelling reason to invest. The recent developments highlight Broadcom’s strong position in the competitive tech market and its ability to capitalize on increasing AI demand.
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