Broadcom's Generative AI, Custom Silicon Future Is 'Most Vital And Attractive': Analyst
Portfolio Pulse from Anusuya Lahiri
BofA analyst Vivek Arya reaffirmed a Buy rating on Broadcom Inc (AVGO) with a price target of $1200, citing generative AI and custom silicon as key growth drivers. Arya estimates a 2.3% to 7.3% EPS accretion in FY24 and FY25, with potential for over 10% accretion and $60+ EPS in CY25 if synergies are realized quickly. Risks include macro conditions and integrating VMware Inc synergies, as well as managing Broadcom's $67 billion debt. Arya sees any volatility upon VMware's acquisition close as a buying opportunity. Susquehanna analyst Christopher Rolland also maintained a Positive rating on Broadcom, raising the price target from $1010 to $1100. AVGO shares were down slightly at $947.61.
November 28, 2023 | 5:20 pm
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POSITIVE IMPACT
Broadcom Inc (AVGO) received a reiterated Buy rating from BofA with a $1200 price target and a Positive rating from Susquehanna with a raised price target of $1100, highlighting the company's potential in generative AI and custom silicon.
The reiterated Buy rating and increased price targets from analysts suggest a positive outlook for Broadcom's stock in the short term, especially with the focus on growth areas like AI and custom silicon. The potential for EPS accretion and the strategic acquisition of VMware are seen as positive indicators, despite the noted risks.
CONFIDENCE 85
IMPORTANCE 90
RELEVANCE 100
POSITIVE IMPACT
Alphabet Inc (GOOG) is mentioned as a key customer for Broadcom's AI-driven sales, with the Google Tensor Processing Unit contributing to Broadcom's projected $8 billion in sales for FY24.
Alphabet's use of Broadcom's technology for its Tensor Processing Unit indicates a strong business relationship that could positively impact Broadcom's sales and, by extension, Alphabet's capabilities in AI, potentially benefiting both companies' stock prices in the short term.
CONFIDENCE 80
IMPORTANCE 70
RELEVANCE 60
POSITIVE IMPACT
Alphabet Inc (GOOGL) is involved with Broadcom's AI sales through the Google Tensor Processing Unit, which is expected to drive significant revenue for Broadcom in FY24.
The mention of Alphabet's Google TPU as a key factor in Broadcom's AI sales forecasts suggests that Alphabet's stock could see a positive impact due to the increased use of its AI technology and the potential success of its partnership with Broadcom.
CONFIDENCE 80
IMPORTANCE 70
RELEVANCE 60