On Thursday, Deutsche Bank maintained a Buy rating on Broadcom Limited (NASDAQ:AVGO), increasing the stock price target to $1,900 from the previous $1,500.
The adjustment follows Broadcom's reported revenue beat for the second fiscal quarter of 2024, with figures reaching approximately $12.5 billion compared to Deutsche Bank's estimate of around $11.7 billion. This performance was notably driven by robust growth in the AI sector, where Custom compute and Connectivity segments both saw growth exceeding 30% quarter over quarter.
Broadcom's recent financial results also highlighted the successful integration of VMware (NYSE:VMW), with revenues of about $2.7 billion, slightly above the $2.6 billion anticipated by Deutsche Bank. Despite observing cyclical weaknesses in Enterprise and Telco spending, the analyst predicts these areas are stabilizing and expects modest growth to return in the second half of 2024. The company's management has also revised its full-year 2024 revenue guidance upward to approximately $51 billion from an earlier estimate of around $50 billion.
The firm's confidence in Broadcom is further bolstered by the company's announcement of a 10-for-1 stock split. The analyst believes that the semiconductor industry player remains highly appealing due to its significant involvement in the growing AI market, potential for a cyclical recovery in its core business, and the opportunities for growth and synergy from the recent VMware acquisition.
In light of these developments, Deutsche Bank has uplifted its estimates for Broadcom. The firm's outlook suggests that AI will likely continue to scale in the latter half of the year and that VMware could provide additional benefits to its approximate $12 billion target. The analyst's commentary underscores Broadcom as a strong contender within the semiconductor space, with multiple drivers for sustained growth.
In other recent news, Broadcom Inc. has seen a surge of investor interest following significant developments. The company's revenue forecast for AI-related chips has been raised to $11 billion, up from the previous $10 billion estimate. This update came alongside an upward revision of their annual revenue and core profit outlooks. In addition, the company announced a 10-for-1 stock split, which has been positively viewed by analysts from firms such as Triple D Trading and GraniteShares.
Broadcom's recent acquisition of VMware Inc. has also contributed to its financial growth, adding $2.7 billion to the company's second-quarter revenue. Analysts from Piper Sandler, Oppenheimer, and Wells Fargo have responded to these developments by raising their price targets for Broadcom, reflecting confidence in the company's financial performance and future prospects.
Broadcom's focus on AI technology extends to the production of the next generation of custom AI chips for major "hyperscaler" clients, which are believed to include Alphabet (NASDAQ:GOOGL) Inc. and Meta Platforms Inc (NASDAQ:META). This strategy, along with the company's robust financial performance, led to several firms, including Melius, Truist Securities, Cantor Fitzgerald, and Citi, raising their price targets for Broadcom. These recent developments highlight Broadcom's growth, particularly in the AI sector.
InvestingPro Insights
Broadcom Limited's (NASDAQ:AVGO) recent performance has caught the attention of analysts and investors alike. According to real-time data from InvestingPro, Broadcom's robust revenue growth is reflected in its impressive 12.94% increase in revenue over the last twelve months as of Q1 2024, with a particularly high quarterly revenue growth of 34.17% in Q1 2024. The company's market capitalization stands strong at $786.95 billion, underscoring its significant presence in the industry.
InvestingPro Tips highlight the company's consistent financial practices and potential for growth. Broadcom has not only raised its dividend for 14 consecutive years, but it has also maintained dividend payments for 15 consecutive years, indicating a reliable return for investors.
Moreover, analysts anticipate sales growth in the current year, which aligns with the upward revision of its full-year 2024 revenue guidance to approximately $51 billion. This growth narrative is further supported by the company's strong return over the past year, with a 79.19% increase in the one-year price total return.
Investors interested in deeper analysis might consider the additional 16 tips available on InvestingPro's platform, which provide further insights into Broadcom's financial health and market position. For those looking to enhance their investment strategy, use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. With these tools at hand, investors can better assess Broadcom's potential as a key player in the semiconductor and AI industries.
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