On Thursday, Broadcom Limited (NASDAQ: NASDAQ:AVGO) saw its price target increased by Baird from $1,500.00 to $1,950.00, while the firm maintained an Outperform rating on the stock. The adjustment follows Broadcom's announcement of an improved revenue outlook, with networking revenue now expected to rise by 40% year-over-year compared to the previously forecasted 35%. Additionally, the company's AI revenue is projected to surpass $11 billion.
Broadcom's management has also revised its full fiscal year 2024 revenue guidance upwards to $51.0 billion. This positive adjustment is attributed to the company being selected for Google (NASDAQ:GOOGL)'s v7 Tensor Processing Unit (TPU), a significant development in its AI business.
The semiconductor bookings that do not involve AI have also shown a robust increase of 30% year-over-year. While the second fiscal quarter of 2024 is seen as a low point for the industry, Broadcom is expected to stabilize in the second half of the year.
The Outperform rating by Baird reflects confidence in Broadcom's performance and market position. The firm's analysis indicates a favorable outlook for the company amidst a challenging semiconductor market, with Broadcom set to maintain its growth trajectory in the latter half of the year.
In other recent news, Broadcom has seen significant growth in its AI revenue, leading to an upward revision of its annual sales forecast to $51 billion. The company's second-quarter consolidated net revenue reached $12.5 billion, marking a 43% increase from the previous year. This surge was mainly due to Broadcom's AI revenue, which soared by 280% to $3.1 billion. The integration of VMWare and the transition to an annual subscription model were key contributors to this success.
Investment firms Rosenblatt Securities, Jefferies, and UBS have all upgraded their share price targets for Broadcom based on these strong results. Rosenblatt Securities has increased its price target to $1,650, citing the company's robust performance and growth in AI networking. Jefferies raised its target to $2,050, attributing the adjustment to stronger AI trends, while UBS increased its target to $1,735, citing the company's strong performance and potential for further financial growth.
Despite declines in server storage connectivity and broadband revenues, Broadcom anticipates over $11 billion in AI revenue for fiscal year 2024 and expects a modest recovery in server storage connectivity in the latter half of the year.
InvestingPro Insights
Following the upbeat forecast by Broadcom Limited (NASDAQ: AVGO), current metrics from InvestingPro underscore the company's robust financial status and market optimism. Broadcom's market capitalization stands at a commanding $693.05 billion USD, reflecting its significant presence in the industry. The company's commitment to shareholder returns is evident, with a notable dividend yield of 1.4% and a track record of raising dividends for 15 consecutive years, aligning with the positive sentiment from analysts who anticipate further sales growth in the current year.
InvestingPro data also highlights Broadcom's impressive revenue growth, with the last twelve months as of Q1 2024 showing a 12.94% increase, and a substantial quarterly rise of 34.17% in Q1 2024. This growth trajectory is consistent with the firm's upwardly revised full fiscal year 2024 revenue guidance. Moreover, the company's price is trading near its 52-week high, at 99.32% of the peak, which could indicate investor confidence in its future prospects.
For investors looking to delve deeper into Broadcom's performance and potential, there are additional InvestingPro Tips available, including insights into the company's earnings multiples and valuation metrics. To explore these further, visit https://www.investing.com/pro/AVGO, and don't forget to use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. With 17 more InvestingPro Tips available, investors can gain a comprehensive understanding of Broadcom's market position and investment potential.
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