Following a stock split announcement, companies have historically seen their share prices rise by an average of 25.4% over the next year, according to Bank of America. This trend could have implications for Broadcom (NASDAQ: AVGO), which recently announced a 10-for-1 stock split. Since the announcement, Broadcom’s share price has increased by 3%, leaving room for potential growth of around 22% through June 2025.
To better understand Broadcom’s prospects, let’s delve into its business segments and Wall Street’s expectations. The company operates in two main areas: semiconductor solutions and infrastructure software. Its semiconductor revenue comes from various markets, including wireless devices, data center networking equipment, and storage systems. Broadcom also designs customized silicon chips, such as artificial intelligence (AI) accelerators. On the software side, the company offers solutions for cybersecurity, mainframe software, and virtualization, following its acquisition of VMware.
Broadcom holds a strong position in several markets, including AI infrastructure, where demand is expected to drive growth. The company’s dominance in Ethernet switch chips and high-end ASICs puts it in a prime position to benefit from the increasing adoption of AI technology. In fact, analysts predict that Broadcom’s custom AI chip sales will grow rapidly in the coming quarters, driven by new clients such as ByteDance and OpenAI.
Wall Street is optimistic about Broadcom’s future, with a median price target of $195 per share, implying 13% upside from its current price. Analysts expect the company’s earnings to grow at 22% annually through 2025, making its current valuation appear reasonable.
For patient investors seeking a reasonably priced semiconductor stock with exposure to the growing AI market, Broadcom may be an attractive option. However, as with any investment, it’s essential to approach with caution and consider starting with a small position before building it over time.
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