Mizuho cuts Broadcom stock target to $250, keeps Outperform rating

On Friday, Mizuho (NYSE:MFG) Securities maintained its Outperform rating on Broadcom Limited (NASDAQ:AVGO) but reduced the price target to $250 from the previous $260. This adjustment comes after Broadcom reported robust January quarter results and provided April quarter guidance that surpassed expectations. With an impressive gross profit margin of 76.26% and a substantial market capitalization of $843.76B, Broadcom continues to demonstrate strong financial performance. According to InvestingPro data, the company’s revenue grew by 40.3% in the last twelve months. Broadcom’s guidance for the April quarter is set at approximately $14.9 billion, higher than the anticipated $14.6 billion, showcasing strong gross margins and progress in artificial intelligence (AI) initiatives.

Broadcom’s recent performance has been marked by significant developments in its AI sector. The company now has seven custom AI XPU customers, with three already shipping, two expected to tape out in the fiscal year 2025, and two new customers deeply engaged. The April quarter’s AI revenue is projected to be around $4.4 billion, indicating a 7% quarter-over-quarter increase. InvestingPro analysis shows that Broadcom is a prominent player in the Semiconductors industry, with analysts expecting continued net income growth this year. This aligns with Broadcom’s reaffirmed serviceable addressable market of $60-90 billion, with potential upside from four new XPU engagements.

The company is also accelerating its operating expenses to focus on the tape-out of its 2nm AI XPU, doubling the capacity for Tomahawk 5, and developing Tomahawk 6. The April quarter guidance for Storage, Broadband, Wireless, and Industrial segments indicates a high single-digit percentage increase and a double-digit percentage increase, respectively, with a 20% quarter-over-quarter decline in the Wireless segment and a decrease in the Industrial segment.

Furthermore, Infrastructure Software (ETR:SOWGn) for the April quarter is expected to see a slight decrease of approximately 3% quarter-over-quarter, with January quarter revenue at $6.7 billion. Notably, VMWare has secured more than 70% of its largest 10,000 customers on VCF solutions. With industry-leading fiscal year 2025 estimated gross margins and operating margins at approximately 79% and 64%, respectively, and free cash flow per year potentially growing to approximately $33 billion in fiscal year 2025, Mizuho has reiterated its Outperform rating. The firm has raised its estimates while adjusting the price target to reflect these updates. For deeper insights into Broadcom’s valuation and growth prospects, including 18 additional ProTips and comprehensive financial analysis, visit InvestingPro, where you’ll find exclusive research reports and detailed metrics.

In other recent news, Broadcom Limited has reported impressive financial results for its first fiscal quarter of 2025, surpassing Wall Street’s expectations. The company achieved revenues of $14.9 billion and earnings per share (EPS) of $1.60, both exceeding forecasts. A significant contributor to this success was the strong performance of its AI semiconductor segment, which generated $4.1 billion in revenue. Looking ahead, Broadcom anticipates second-quarter revenues of $14.9 billion, with AI sales projected to increase to $4.4 billion, marking a 44% year-over-year growth.

Several analyst firms have weighed in on Broadcom’s performance. Piper Sandler reaffirmed an Overweight rating with a $250 price target, citing the company’s strong AI growth. Bernstein also maintained an Outperform rating with a $250 target, highlighting Broadcom’s solid execution and potential for continued AI strength. Meanwhile, KeyBanc Capital Markets raised its price target to $275, driven by robust AI sales and new partnerships with companies like Apple (NASDAQ:AAPL) and OpenAI.

Despite these positive developments, Raymond (NSE:RYMD) James maintained a Market Perform rating, noting competitive pressures from companies like Nvidia (NASDAQ:NVDA) and potential risks such as export controls. Broadcom’s management remains optimistic, especially with the addition of two new AI engagement partners, expanding its market opportunities. These recent developments reflect Broadcom’s strong position in the AI sector and its strategic partnerships, which are expected to drive future growth.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.