Broadcom Stock (NASDAQ:AVGO)
Although sales have slowed from pandemic-related increases, Broadcom stock (NASDAQ:AVGO) is up 2% at lunchtime Friday after the company reported profits that were above expectations and provided excellent forecasts for the upcoming quarter.
Thursday’s revelation caused the price to fall after the market closed, but the Broadcom stock rose when investors digested the study’s implications on Friday.
The company’s CEO, Hock Tan, anticipated that AI-related revenues would treble this year, hitting $1 billion every quarter. Tan had previously cautioned that sales booms during COVID-19 couldn’t be sustained.
A sales prediction of $8.85B for the fiscal third quarter beat the consensus estimate of $8.71B. However, this would be the weakest annual gain in years (less than 5%).
In reaction to the news, most analysts maintained their Buy recommendations and increased their price targets. With a new price target of $950 per share, BofA predicts an additional 18% upside from current levels compared to its previous expectations for revenues and EPS in 2024.
Analyst Vivek Arya said the company is being cautious in its modeling as it watches the emergence of AI networking prospects. We anticipate an added $2 billion in sales and $3 per share in earnings “in a bull case scenario where AVGO can increase AI exposure to 25% of revenues (and keep growth rates of non-AI assets at previously specified levels).
KeyBanc has maintained its Overweight rating and increased its price objective for the stock from $820 to $940. Similarly, AVGO’s artificial intelligence (AI) perspective has led analyst John Vinh to improve projections, saying, “Based on AVGO’s AI outlook, there is a likely meaningful upside to FY23 AI expectations of $3.8B and upside to FY24 Networking [revenues].”
Truist also increased its projections, adding, “Buy for dividends, M&A benefits, and a sprinkle of AI.” An analyst named William Stein said that “a key consideration becomes whether this is added to, or cannibalizes, the rest of AVGO’s semi-growth” when more information about artificial intelligence (AI) is provided by management, such as 70% growth.
He raised his earnings per share (EPS) prediction for calendar 2024 from $42.44 to $46.83. He speculated that artificial intelligence (AI) would eat into some AVGO semi-sales but be a net additive to growth. In his opinion, the earnings report included no bad news.
Featured Image: Freepik
Author Shariq Khan 
