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On Friday, Truist Securities updated their outlook on Broadcom Limited (NASDAQ:AVGO), increasing the price target from $260.00 to $267.00 while maintaining a Buy rating on the stock. The adjustment follows Broadcom’s reported earnings for the fourth quarter of the fiscal year ending in January and their guidance for the first quarter ending in April. The company’s performance and forecasts were primarily bolstered by strong demand and innovation in artificial intelligence (AI), which compensated for softer results in its traditional semiconductor business. With a market capitalization of $843.76 billion and impressive gross profit margins of 76.26%, Broadcom demonstrates strong financial fundamentals. According to InvestingPro analysis, the company currently appears to be trading above its Fair Value, reflecting the market’s optimistic outlook on its AI initiatives.
Broadcom’s management emphasized the role of three customers in potentially expanding the serviceable available market (SAM) to $60-90 billion by fiscal year 2027. Additionally, they pointed to four pre-customers that could potentially accelerate the company’s sales compound annual growth rate (CAGR) to above 30%. This prospect was described by the analyst as "stunning."
In response to these developments, Truist Securities has increased its calendar year 2026 earnings per share (EPS) estimate for Broadcom to $8.49, up from the previous forecast of $8.26. The new price target of $267 is based on a 31.5 times multiple, which includes a 10.5 times premium compared to the S&P 500 index. This valuation is considered reasonable in comparison to Broadcom’s AI industry peers.
The analyst’s commentary highlighted Broadcom’s promising position in the AI sector, suggesting that the company’s growth in this area is a compelling reason to invest. In addition to the AI-driven growth potential, Truist Securities also noted the company’s consistent dividend momentum and the potential benefits from mergers and acquisitions as factors supporting the Buy rating. InvestingPro data reveals impressive revenue growth of 40.3% in the last twelve months, with 18 additional ProTips available for subscribers, including insights on dividend consistency and financial health metrics. For a deeper understanding of Broadcom’s position in the semiconductor industry, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.
Broadcom’s recent financial performance and forward-looking guidance, as outlined by Truist Securities, underscore the company’s strategic focus on AI as a key driver for future growth. The raised price target reflects confidence in Broadcom’s ability to capitalize on the increasing demand for AI technologies and to outpace its semiconductor market challenges. The company maintains a strong financial health score of "GOOD" according to InvestingPro metrics, with particularly high scores in profitability (3.88/5) and growth (3.13/5).
In other recent news, Broadcom Limited has reported strong financial results, with earnings and revenue figures surpassing Wall Street expectations. The company’s combined revenue and earnings per share (EPS) reached $29.8 billion and $3.16, respectively, exceeding consensus estimates of $29.3 billion in revenue and an EPS of $3.01. This performance was largely driven by Broadcom’s Artificial Intelligence (AI) Semiconductor segment, which generated revenues of $4.1 billion, marking a 77% year-over-year increase. Broadcom’s guidance for the April quarter projects AI revenue of $4.4 billion, representing a 7% quarter-over-quarter growth.
Analysts have responded with varied ratings and price targets for Broadcom. Wolfe Research maintained a Peer Perform rating, while Citi reiterated a Buy rating with a $220 price target, citing the company’s robust AI sector. Cantor Fitzgerald reaffirmed an Overweight rating with a $300 price target, highlighting the company’s solid financial health. Mizuho (NYSE:MFG) Securities maintained an Outperform rating but adjusted the price target to $250 from $260, reflecting updates in their estimates. Piper Sandler also reaffirmed an Overweight rating with a $250 price target, emphasizing Broadcom’s strong performance in AI growth.
Broadcom’s AI business is projected to account for approximately 27-28% of fiscal year 2025 revenue, with new AI engagements expected to mitigate potential risks from sanctions and market share losses. The company’s management noted significant customer adoption of VMware (NYSE:VMW)’s VCF, with over 70% of its largest clients integrating the solution. These developments underscore Broadcom’s strategic focus on AI and its potential for sustained growth in the semiconductor industry.
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