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Investing.com - Goldman Sachs has maintained its Buy rating and $340.00 price target on Broadcom Limited (NASDAQ:AVGO) following the company’s quarterly results that exceeded market expectations. According to InvestingPro data, Broadcom, with its $1.44 trillion market cap, maintains a GOOD overall financial health score and has shown remarkable growth with revenue increasing by 33.85% over the last twelve months.
Broadcom reported revenue of $16.0 billion, slightly above analyst consensus of $15.9 billion. The company’s gross margin reached 78.4%, marginally higher than the Street’s expectation of 78.2%, while operating margin stood at 65.5%, in line with forecasts. InvestingPro analysis reveals consistently impressive gross profit margins, currently at 77.03%, reflecting the company’s strong operational efficiency. Subscribers can access 18 additional ProTips and comprehensive financial metrics on the platform.
AI Semiconductor revenue was a particular bright spot at $5.2 billion, exceeding market expectations of $5.1 billion. The company’s Semiconductor Solutions segment generated $9.2 billion, while Infrastructure Software revenue came in at $6.8 billion, above the anticipated $6.7 billion.
For the fourth quarter, Broadcom provided guidance above consensus estimates, projecting revenue of $17.4 billion compared to the Street’s expectation of $17.0 billion. The company expects AI Semiconductor revenue to reach $6.2 billion, significantly higher than analyst projections of $5.7 billion.
Goldman Sachs’ $340 price target represents a 38X price-to-earnings multiple applied to its normalized earnings per share estimate of $9.00, with the firm noting potential risks including slowdowns in AI infrastructure spending, share loss in custom compute, inventory challenges in non-AI segments, and increased competition in VMware. Based on InvestingPro’s Fair Value analysis, the stock appears to be trading above its intrinsic value, with a current P/E ratio of 108.28x. For detailed valuation metrics and a comprehensive Pro Research Report covering Broadcom’s financial health and growth prospects, visit InvestingPro.
In other recent news, Broadcom reported a significant 22% year-over-year increase in third-quarter revenue, reaching $15.95 billion, driven by strong demand for AI products. The company also posted a GAAP net income of $4.14 billion for the quarter, a notable turnaround from a loss of $1.88 billion in the same period last year. Non-GAAP net income rose to $8.4 billion from $6.12 billion a year earlier. In light of these developments, Evercore ISI raised its price target for Broadcom to $342, maintaining an Outperform rating, citing strong demand for data center connectivity and networking chips. Similarly, Cantor Fitzgerald increased its price target to $350, highlighting the anticipated growth in Broadcom’s Semiconductor Solutions segment, particularly from Google’s TPU chips. Additionally, Broadcom announced that VMware Private AI Services will be integrated into VMware Cloud Foundation 9.0, enhancing the platform’s AI capabilities. This move has already seen commitments from nine of the top 10 Fortune 500 companies. VMware Cloud Foundation 9.0 is now available, with AI services expected to be accessible in Broadcom’s first quarter of fiscal year 2026.
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