AI
AI Drives Forward: Background of the Recent Target Price Increase for Broadcom Stock
AI Hype Rewards NVIDIA and Microsoft in the Stock Market, Now Broadcom Steps into the Investor Spotlight – Analysts See Great Potential.
The stock market has rewarded companies such as NVIDIA and Microsoft in recent months for their openness to Artificial Intelligence. Broadcom's stock price has also benefited from this trend, albeit to a lesser extent than NVIDIA.
Yet a UBS analyst still sees great potential here. Tech giants and semiconductor manufacturers that have established Artificial Intelligence as part of their business are highly prized by investors. Broadcom, one of the world's largest network equipment manufacturers, is also increasingly coming into focus.
The company's custom ASIC business, in particular, which according to UBS analyst Timothy Arcuri will grow significantly more in fiscal year 2025 than previously forecasted, appears promising. Arcuri has therefore increased his price target for Broadcom by 400 US dollars to 1,475 US dollars per share - an increase of 18 percent compared to the last closing price.
A Closer Look at the First-Quarter Earnings Report to Be Released on March 7 Will Reveal Whether This Stock Valuation is Justified. According to Analysts, Earnings Per Share Will Increase from $10.330 to $10.405, and Revenues Are Expected to Rise from $8.9 Billion in the Same Period Last Year to $11.8 Billion.
For the fiscal year 2024, Broadcom forecasts a revenue of around 50 billion US dollars, with a quarter coming solely from the AI segment. By comparison, the AI segment contributed only 15 percent to total revenues in the previous year.
Regarding the European business magazine "The Street," Broadcom CEO Hock Tan already emphasized growth opportunities in the AI market when presenting the fourth-quarter balance sheet. He said, "The market is growing and accelerating steadily." Whether the AI business actually affects Broadcom's stock price as strongly as predicted by UBS analyst Arcuri remains to be seen.
Other experts are less optimistic in this respect: Out of the 21 analysts monitoring the Broadcom stock, 19 recommend buying the stock, while only two issue a hold recommendation.
The average target price is only slightly above the current stock price at 1,222 US dollars per share.
It is obvious that AI has significant potential for Broadcom and its stock. The company's future prospects will be significantly influenced by how well it can establish itself in this rapidly growing market.
