Interest in artificial intelligence (AI) has surged recently, affecting the tech industry significantly.
Broadcom (AVGO -3.47%) is a key player, with semiconductors and data center tech essential for AI. This has boosted its market cap by over 100% in the last year, leading to a notable 10-for-1 stock split.
Following strong fiscal third-quarter results, Wall Street is optimistic, raising price targets, including a recent one from analyst Vijay Rakesh.
Custom AI Chips
Rakesh kept a “buy” rating on Broadcom, raising his price target to $220, suggesting a potential 21% gain over the next 12 to 18 months.
He believes Broadcom’s AI potential is underestimated, particularly its custom silicon business, which could generate over $16 billion annually. The market for application-specific integrated circuits (ASICs) is also expected to exceed $56 billion soon.
In its fiscal 2024 third quarter, Broadcom saw a 47% revenue increase year-over-year, driven by AI chip solutions and networking products.
Broadcom stock is currently valued at 37 times forward earnings, which is appealing considering its 2,530% growth over the past decade.
With strong prospects, Broadcom is a buy.
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