With only minutes to go in Friday’s trading session, chip stock Broadcom (NASDAQ:AVGO) managed to achieve a feat that used to be somewhat difficult, before several managed to pull it off just in the last couple of days: a seven-session winning streak. That’s just what happened to Broadcom, as investors kept coming in and shares surged nearly 2.5% in Friday’s trading session.
The reason? Again, fairly simple; investors are enthusiastic about artificial intelligence (AI), and know there’s more behind it than a lot of programming know-how. The vital infrastructure required to keep AI up and running is also a crucial part of the picture, and chip makers are eager to make it known their hardware is the best for giving AI its necessary edge. But it’s not just artificial intelligence that had investors moving into Broadcom shares; it’s also a general optimism about the state of the semiconductor market, and how spending on computer hardware should rise as interest rates start to fall. They’re projected to do just that in 2024, after all, so investors are trying to get in ahead of the curve.
Further Developments May Spark Interest
There are some other key points to keep an eye out for, however, that may impact Broadcom’s share price over the next several months. For instance, there’s the issue of VMWare licensing; Broadcom has reportedly done away with the lifetime license. Worse, the lifetime licenses that have already been sold could be subject to a loss of support down the line, reports note. That might cost Broadcome a few customers in the post-acquisition environment. Broadcom’s offering “upgrade pricing incentives,” but adding a bill on to things in this environment, well, that may backfire. Further, some analysts are looking for Broadcom to engage in a 20 to one stock split in the future, thanks to its current hefty valuation. That could open up the field to new buyers, and few are likely to ditch their shares in the ensuing post-split environment.
What is the Price Target for Broadcom?
Turning to Wall Street, analysts have a Strong Buy consensus rating on AVGO stock based on 16 Buys and three Holds assigned in the past three months, as indicated by the graphic below. After a 109.16% rally in its share price over the past year, the average AVGO price target of $1,071 per share implies 5.42% downside risk.
