Interest in artificial intelligence (AI) has exploded recently, impacting the tech industry significantly.
Broadcom (AVGO -3.47%) is a key player, providing essential semiconductors and data center technology for AI. This has helped the company’s market cap grow over 100% in the past year, leading to a notable 10-for-1 stock split.
After stronger-than-expected third-quarter results last month, Wall Street is optimistic, raising price targets for the company.
Custom AI Chips
Mizuho Securities analyst Vijay Rakesh upgraded Broadcom’s stock rating while raising the price target to $220, suggesting a potential 21% gain in the next 12 to 18 months.
Rakesh believes that Broadcom’s custom silicon business, especially its application-specific integrated circuits (ASICs), could generate over $16 billion annually, with the overall ASIC market exceeding $56 billion in the coming years.
Broadcom’s revenue grew 47% year-over-year in its fiscal 2024 third quarter (ending Aug. 4), driven by strong AI chip and networking sales.
Although Broadcom stock trades at 37 times forward earnings, this is attractive given its impressive 2,530% increase over the past decade. Overall, Broadcom is a strong buy.
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