Broadcom’s AI Breakthrough Sends Shares Soaring
The semiconductor giant’s latest earnings report has sent shockwaves through the market, with shares surging on the back of impressive artificial intelligence (AI) growth. Broadcom, a leader in networking chips, has solidified its position as the number two chip stock behind Nvidia in the AI race.
AI Revenue Skyrockets 220%
The company’s AI revenue jumped to $12.2 billion in the fiscal year, driven by the growth of its AI XPUs and Ethernet networking portfolio. This staggering figure accounts for nearly half of its $30.1 billion semiconductor revenue. The market has taken notice, with analysts scrambling to upgrade the stock and raise price targets.
Wall Street Weighs In
Truist, among other analysts, has reaffirmed its bullish stance on Broadcom, raising its price target from $245 to $260 per share and maintaining its buy rating. This marks the bank’s second price target hike since the earnings report, reflecting the stock’s remarkable 33% surge. Based on the $260 price target, Truist believes Broadcom has near-term upside of 8%.
A Compelling Growth Story
Management’s forecast that demand from three of its ASIC customers will reach $60 billion to $90 billion by fiscal 2027 is particularly impressive, implying a compound annual growth rate of 20% to 30% over the next three years. Broadcom’s strategic acquisitions and organic growth have positioned the company to capitalize on AI demand, making it an attractive investment opportunity.
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