Broadcom Earnings Show It’s Not Nvidia. Why Its Stock Is Worth a Look Anyway.

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Broadcom

The next big semiconductor will play on the development of artificial intelligence

Nivea
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That’s setting a high for the stock, but Wall Street analysts remain bullish on AI’s prospects.

Broadcom

(Symbol: AVGO) shares were down at $881.47 early on Friday, as investors appeared to be disappointed that its latest earnings were only slightly better than consensus and guidance was in line with existing forecasts.

Broadcom may be suffering because Nvidia’s ( NVDA ) earnings miss beat expectations. However, Broadcom’s AI-related revenue is expected to grow to $3.8 billion this year and more than $7 billion next fiscal year. That growth rate is enough to get analysts behind the stock.

“Overall, we believe Broadcom is successfully building a soft landing with cyclical resilience, world-class growth opportunities in AI, and the capabilities available.

VMware

As Deutsche Bank’s Ross Seymour wrote in a research note.

Seymour raised his price target on Broadcom to $950 from $905 and maintained a buy rating.

Broadcom attracted a lot of positive feedback because AI’s revenue forecast made it the second-largest U.S. chip company in the sector, behind Nvidia. Analysts were generally reiterating their support after the latest earnings.

KeyBanc’s John Vinh raised his price target to $1,000 from $940. The new target is based on a price-to-earnings multiple of 19 times projected fiscal 2024 earnings, and is based in part on the expected closing of the VMware acquisition.

Rick Shaffer raised his price target at Oppenheimer to $990 from $900, based on a P/E multiple of 22 times the research firm’s expected earnings for Broadcom next fiscal year.

“We like Broadcom’s continued growth, led by its DC/Cloud, Network, Wireless and Software franchises. Repeat good results,” Shaffer wrote.

Write to Adam Clark at [email protected]