Broadcom’s (AVGO) stock surged 24% last Friday, pushing the semiconductor company’s market cap to an impressive $1 trillion. The momentum has continued into pre-market trading today, with AVGO stock up nearly 3%. This remarkable rise followed CEO Hock Tan’s prediction that artificial intelligence (AI) could generate $60 billion to $90 billion in revenue by 2027. Tan’s optimistic forecast is driven by the growing demand for chips powering AI technology, especially as Big Tech shifts away from Nvidia’s (NVDA) expensive processors.
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Analysts Raise Price Targets on AVGO
After the rally, Piper Sandler raised Broadcom’s price target to $250 from $200, keeping an Overweight rating on the stock. The firm pointed to a strong Q4 and upbeat January guidance, particularly around the AI business. AI revenues are up from $3.8 billion in 2023 to $12.8 billion in 2024, while non-core segments have pulled back about 20%. Piper expects AI growth to continue at a “rapid pace” for Broadcom.
Broadcom is getting a lot of love from analysts. BofA’s Vivek Arya also raised his price target to $250 from $215, keeping a Buy rating. Arya boosted his FY25 and FY26 EPS forecasts, citing a “surging AI opportunity.” Similarly, JPMorgan’s Harlan Sur lifted his price target to $250 from $210, calling Broadcom a top pick in semiconductors. Evercore ISI, Truist, TD Cowen, Jeffries, Bernstein, and Morgan Stanley all followed suit, increasing their price targets and highlighting Broadcom’s leadership in the custom AI chip market.
AI Chip Market Booms
Broadcom’s position in the AI chip market is booming, with $12.2 billion in AI revenue for Fiscal 2024. Analysts from TD Cowen estimate that Broadcom could capture $50 billion of the total $90 billion opportunity by 2027, given their 70% market share in 2024. The company’s chips power major data centers for tech giants like Microsoft (MSFT) and Meta (META), both of which capitalize on the massive demand for AI-driven infrastructure.
With a lower price-to-earnings ratio than competitors like Nvidia, the company is well-positioned to benefit from the ongoing AI boom. According to Rosenblatt Securities, Broadcom’s potential is clear, but its future market share remains uncertain.
Is AVGO a Buy or Sell?
Analysts remain bullish about AVGO stock, with a Strong Buy consensus rating based on 15 Buys and two Holds. Over the past year, AVGO has increased by more than 105%, and the average AVGO price target of $204.62 implies a downside potential of 5.2% from current levels.
