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Investing.com - Goldman Sachs initiated coverage on Broadcom Limited (NASDAQ:AVGO) with a Buy rating and a price target of $315.00 on Thursday. The semiconductor giant, currently trading near its 52-week high with a market capitalization of $1.31 trillion, has received a "GREAT" financial health score according to InvestingPro analysis.
The investment bank cited Broadcom’s dominant franchise position across several segments of infrastructure software, achieved through its long-term merger and acquisition strategy.
Goldman Sachs expects Broadcom to maintain its leading position in enterprise networking silicon while leveraging this advantage to secure majority share in custom silicon processors for major U.S. hyperscalers.
The firm projects artificial intelligence will comprise over 40% of Broadcom’s business by 2026, while the company continues generating steady, growing profitability in its core infrastructure software business.
Goldman Sachs justified Broadcom’s premium valuation by pointing to greater visibility provided by its sole-sourced position at key silicon accounts and the mission-critical nature of its software portfolio.
In other recent news, Broadcom has made significant strides in its financial and product landscape. Fitch Ratings assigned a ’BBB’ rating to Broadcom’s proposed senior notes issue, highlighting the company’s strengthened financial flexibility and a robust revenue profile bolstered by AI and VMware products. The rating agency forecasts annual free cash flow between $15 billion and $20 billion, anticipating stable EBITDA margins of approximately 60%. Mizuho (NYSE:MFG) has raised its price target for Broadcom to $315, maintaining an Outperform rating, citing strong AI chip performance and aligning fiscal 2025 and 2026 estimates with consensus projections. JPMorgan reiterated an Overweight rating on Broadcom, noting strong AI demand and potential positive EPS revisions due to a recovery in its non-AI semiconductor business. Broadcom has also announced the release of VMware Cloud Foundation 9.0, aimed at enhancing private cloud environments with features like a unified interface and advanced security controls. The company continues to focus on product development, with its AI XPU product advancements on track for this year. These developments underscore Broadcom’s ongoing efforts to leverage AI growth opportunities while maintaining its financial stability.
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