Analyst on Wall Street Predicts Broadcom's Value to Reach $260. Should Investors Purchase Immediately?
Broadcom's (AVGO 0.06%) shares are experiencing a substantial surge. The multifaceted semiconductor company left the market in awe with its fiscal 2024 fourth-quarter earnings report, specifically its artificial intelligence (AI) expansion.
Broadcom, commonly associated with networking chips, has managed to securing the second spot in the AI race, trailing only behind Nvidia. The company appears to be living up to its promise following its impressive performance.
Broadcom announced that its AI revenue surged by 220% to $12.2 billion in the fiscal year, largely due to the expansion of its AI XPUs and "Ethernet networking portfolio". This contribution accounted for almost half of its total $30.1 billion semiconductor revenue for the year. The market is now taking notice of this growth, prompting several analysts to upgrade the stock and boost their price targets post the report.
Truist Anticipates Further Growth for Broadcom
One of the analysts expressing optimism about Broadcom was Truist, which increased its price target from $245 to $260 per share and maintained its buy rating, as per media reports. This price target elevation was the bank's second since Broadcom's earnings report, indicative of the stock's post-earnings rise, with the share price now up 33% as of Dec. 17. According to Truist, Broadcom holds near-term growth potential of around 8% based on the $260 price target.
Truist was particularly impressed by management's prediction that demand from three of its ASIC (custom chip) customers will reach $60 billion to $90 billion by fiscal 2027, translating to a compound annual growth rate of 20% to 30% over the next three years.
Should I Buy Broadcom?
Broadcom has been a consistent performer on the stock market, currently among the most valuable companies globally with a valuation exceeding $1 trillion.
Thanks to strategic acquisitions and organic growth, Broadcom is well-positioned to benefit from the surge in AI demand. The stock still appears to be a good investment opportunity.
As the demand for AI continues to grow, Truist predicts that Broadcom has near-term growth potential of around 8%, leading the analyst to increase its price target for the company from $245 to $260 per share. With its impressive AI revenue surge and strong market performance, Broadcom remains a potential investment opportunity in the realm of finance and investing, especially for those interested in the technological advancements in the field of AI.
