Broadcom Inc., a chip supplier for Apple Inc. and other major tech companies, experienced a dip in its stock price as part of an AI selloff. Shares of Broadcom were down 2.5% following the selloff, but the drop was considered modest compared to declines in other AI-related stocks such as Nvidia and Super Micro Computer. Despite the dip, Bank of America (BofA) raised its price target for Broadcom from $2,000 to $2,150. BofA analysts view Broadcom as transforming from a value stock to a growth stock, driven by the increasing demand for AI products and the recent acquisition of VMware. The optimism surrounding AI-related demand has contributed to a 44% gain in Broadcom's stock so far in 2024.
According to JPMorgan analyst Harlan Sur, Broadcom Inc. is projected to have a $150 billion artificial intelligence (AI) silicon market opportunity in the next five years. The company's AI infrastructure build-out is a key driver of its growth prospects, with a cumulative AI silicon revenue opportunity of over $150 billion across four to five major AI customers. Broadcom's incumbency in the AI ASIC market, along with its expertise in Ethernet networking, positions it as a leader in the sector. Additionally, the company is experiencing a broad recovery in its cyclical semiconductor businesses, including server storage and enterprise networking. With its strategic initiatives and market positioning, Broadcom is well-positioned for sustained growth in both AI and non-AI segments.
Bank of America has named Broadcom as its top AI pick in the chip stock market. Analyst Vivek Arya reiterated a buy rating on Broadcom and maintained a $215 per share price target. The forecast implies more than 25% upside from the current stock price. Broadcom has seen strong demand and better-than-expected second-quarter results, with a 10-for-1 stock split taking effect recently. Arya expects AI to grow into a $30 billion to $50 billion opportunity over the next three to five years. Broadcom's customers include public cloud vendors and consumer-facing AI platforms like Meta and Google-parent Alphabet. The company is described as the best and most consistent generator of cash at 45-50%+ of sales, with plans to use half of its free cash flow for dividends and the rest to pay down debt. [a747b523]