Shares of Broadcom (AVGO -2.37%) are suddenly soaring. The diversified semiconductor company impressed the market with its fiscal 2024 fourth-quarter earnings report last week, in particular its artificial intelligence (AI) growth.
Broadcom, which may be best known for networking chips, has become the No. 2 chip stock behind Nvidia in the AI race, and the company now seems to be fulfilling that promise.
The company said AI revenue jumped 220% to $12.2 billion in the fiscal year due to the growth of its AI XPUs and “Ethernet networking portfolio.” That made up nearly half of its $30.1 billion semiconductor revenue in the year. Now, Wall Street is taking notice with a number of analysts upgrading the stock and raising price targets in the aftermath of the report.
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Truist expects more gains for Broadcom
Among the analysts reaffirming their bullishness on Broadcom was Truist, which raised its price target from $245 to $260 per share and reaffirmed its buy rating, according to media reports.
The price target hike was the bank’s second since Broadcom reported last week, reflecting the stock’s post-earnings surge as it is now up 33% as of Dec. 17. Based on the $260 price target, Truist believes Broadcom has near-term upside of 8%.
Truist was particularly impressed by management’s forecast that demand from three of its ASIC (custom chip) customers will reach $60 billion to $90 billion by fiscal 2027, implying a compound annual growth rate of 20% to 30% over the next three years.
Is Broadcom a buy?
Broadcom has been a longtime winner on the stock market, and today, the company is one of the most valuable companies in the world with a valuation topping $1 trillion.
Thanks to strategic acquisitions and organic growth, Broacom is well positioned to capitalize on AI demand. The stock still looks like a strong buy.
Jeremy Bowman has positions in Broadcom. The Motley Fool has positions in and recommends Nvidia and Truist Financial. The Motley Fool recommends Broadcom. The Motley Fool has a disclosure policy.
