Bank of America boosts Broadcom price target on growing list of hyperscaler customers
Bank of America is responding to Broadcom’s earnings beat and rosy guidance by raising its price target and estimates on the stock.
Analysts led by Vivek Arya lifted their earnings per share forecasts for the current year and the next two while boosting their price target to $260 from $250, which implies upside of about 35% for the shares.
“AVGO’s outperformance comes as a refreshing change after more contentious EPS calls from peers,” Arya & Co wrote. “We see a rising tide and expect ASICs [customized advanced chips] to command a 10-15% share in a $400-$500 billion long-term addressable opportunity.”
The chip designer is one of BofA’s top five picks in semis, along with Nvidia, Lam Research, Analog Devices, and Marvell Technology (which, like Broadcom, sells a lot of customized advanced chips, and got slammed this week after posting lukewarm earnings).
Broadcom’s ability to gain traction with new, large customers is bolstering the team’s confidence in the company.
“On top of existing three custom silicon customers (shipping today) and two potential customers currently in discussion (on track to tape out their XPUs this year), AVGO announced it is engaged with two additional customers, bringing total engagements to seven,” they added. “Every customer is a hyperscaler with a large enough internal installed base to potentially deploy 1 million plus XPU clusters for developing its own frontier model.”
Most analysts, for the record, feel optimistic about Broadcom as well, with the average price target sitting at $253. Per Bloomberg, 90% of the sell side that cover the name rate it a buy, while 10% deem it a hold.
