Seaport Global initiates Broadcom stock with Buy, $230 target

On Wednesday, Seaport Global Securities began coverage of Broadcom Limited (NASDAQ:AVGO), assigning a Buy rating to the company’s stock along with a price target of $230. With a substantial market capitalization of nearly $900 billion, Broadcom stands as a prominent player in the semiconductor industry. The firm’s analyst pointed to Broadcom’s position as a primary beneficiary of the current boom in artificial intelligence (AI) spending, suggesting that the market has yet to fully appreciate and integrate this potential into the stock’s valuation. According to InvestingPro data, analysts maintain a strong buy consensus with price targets ranging from $198 to $300.

Broadcom’s leading intellectual property, particularly in SERDES technology, and its networking products are seen as key competitive advantages in the custom silicon market. The company’s impressive customer base, which includes tech giants such as Google (NASDAQ:GOOGL), Apple (NASDAQ:AAPL), and TikTok, was also highlighted as a strength. This market leadership is reflected in Broadcom’s exceptional gross profit margin of 76% and robust revenue growth of 40% over the last twelve months.

The analyst noted that Broadcom’s core products, which are not AI-related, continue to perform well and sustain high-profit margins. Furthermore, Broadcom’s foray into software appears to be yielding positive results, with marked increases in profitability observed.

Describing Broadcom as akin to a public equity investor with a sizeable semiconductor portfolio, the analyst underscored the company’s status as a top operator within the semiconductor industry. This characterization reflects the strategic moves and diversified interests of Broadcom as it continues to expand its influence in the tech sector.

In other recent news, Broadcom Inc. has launched a $10 billion stock buyback program, reflecting the company’s confidence in its financial health and diverse portfolio. This initiative is intended to enhance shareholder value and is scheduled to run until the end of 2025. Analysts from Mizuho (NYSE:MFG) Securities view the buyback as a positive signal to investors, although its immediate impact on the stock may be limited. Additionally, Cantor Fitzgerald has adjusted its price target for Broadcom from $300 to $250, maintaining an Overweight rating, citing the company’s strong demand in AI and stability in its software segment. Broadcom’s recent launch of the AI-driven Incident Prediction tool for its Symantec (NASDAQ:GEN) Endpoint Security Complete product aims to bolster cyber defenses by anticipating and disrupting cyberattacks. This new feature is available at no extra cost to existing customers and is part of Broadcom’s efforts to address the rising threat of living-off-the-land attacks. The semiconductor sector, including Broadcom, has also been impacted by a 90-day tariff pause announced by President Trump, providing temporary relief amid ongoing trade tensions. Cantor Fitzgerald analysts highlight the importance of semiconductor stocks despite potential market volatility.

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