Morgan Stanley raises Broadcom stock price target on AI growth outlook

Published 05/09/2025, 09:04
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Investing.com - Morgan Stanley raised its price target on Broadcom Limited (NASDAQ:AVGO) to $382.00 from $357.00 on Friday, while maintaining an Overweight rating on the semiconductor company’s stock. The upgrade comes as Broadcom shows impressive momentum, with the stock delivering a 102.5% return over the past year and currently trading near its 52-week high of $317.35.

The investment bank cited Broadcom’s credible management team and upcoming growth opportunities, particularly in artificial intelligence (AI) technologies, as key factors behind the increased target. The company’s strong execution is reflected in its robust 77.2% gross profit margins and 28% year-over-year revenue growth. According to InvestingPro, which offers comprehensive analysis of 1,400+ stocks, Broadcom currently appears overvalued relative to its Fair Value.

Morgan Stanley noted that while Broadcom hasn’t posted the same level of upside as NVIDIA, the company has a strong track record of execution that makes its growth narrative compelling despite some skepticism about long-term forecasting.

The firm expressed some caution regarding Broadcom’s AI market share claims, pointing out that NVIDIA forecast $7 billion of sequential growth, exceeding Broadcom’s entire quarterly AI revenue, with 3-4 times the networking revenue.

Morgan Stanley also highlighted potential challenges including frequent ASIC program delays, export control risks, and the fact that major ASIC customers are pursuing multiple sourcing strategies that could impact Broadcom’s position.

In other recent news, Broadcom Inc. reported strong earnings for the third quarter of 2025, exceeding analysts’ expectations. The company achieved an earnings per share of $1.69, surpassing the forecast of $1.66, and generated $16 billion in revenue, above the anticipated $15.82 billion. BofA Securities and Barclays both raised their price targets for Broadcom to $400, driven by growth in the company’s custom AI chip business. BofA Securities maintained a Buy rating, while Barclays kept an Overweight rating, highlighting a new customer expected to significantly contribute to revenue in the latter half of fiscal year 2026. Wolfe Research reiterated its Peerperform rating for Broadcom, noting the addition of a fourth XPU customer projected to boost revenue in 2026. These developments reflect growing confidence among analysts in Broadcom’s future performance, particularly in the AI sector.

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