Important points
Chipmaker Broadcom (AVGO)’s recent earnings-fueled rally has made it the latest member of the $1 trillion club. But what will happen to stock prices?
Some on Wall Street believe artificial intelligence-driven demand will push the company’s chip sales to new highs, sending the stock higher in 2025. But others are more cautious, at least in the short term.
Nvidia and Broadcom’s stocks more than doubled in 2024, joining the S&P 500’s top performers this year. But analysts are more bullish on the former, with high hopes for Nvidia in early 2025 and hopes that Broadcom’s next big break could be even further away.
Bernstein analysts told clients on Monday that Broadcom’s “robust AI story is finding its own ‘NVIDIA moment'” as the AI business gains momentum. But they also warned that Broadcom’s “core business remains fairly weak” and that any real opportunity could be years away.
Broadcom’s AI sales skyrocket
Broadcom’s recent rise has drawn comparisons to Nvidia’s meteoric rise.
Demand for chips that support AI has soared, driving sales to record levels. Broadcom announced that revenue from AI in 2024 will more than triple from the previous year to $12.2 billion, and total annual revenue will exceed $51 billion.
During Broadcom’s latest earnings call, CEO Hock Tan said the company sees “the opportunity in AI over the next three years to be tremendous,” according to a transcript provided by AlphaSense. said some of its customers are still expanding their AI infrastructure and their own AI businesses. It is expected to grow faster than other segments.
But analysts don’t seem so sure about the upside potential for Broadcom stock. All 14 analysts covering Broadcom tracked by Visible Alpha hold a “buy” or equivalent rating, but their average price target of $238 represents a partial recovery from Wednesday’s losses. That just marks a decline from the stock’s all-time closing price on Monday. .
Bernstein analysts predict that there could be “significant opportunities” for Broadcom in the coming years. The company’s stock is rated “outperform” and has a price target of $250, about 12% above Wednesday’s closing price, but this comes after the company’s stock fell 7% in the Fed-led tech sell-off. That’s what I received.
Of the 20 analysts covering NVIDIA tracked by Visible Alpha, all but one maintain a Buy rating or equivalent rating on NVIDIA, and their consensus price target is approximately 177. The dollar is on track to rise about 37% from Wednesday’s close of about $129.
Broadcom Named Analysts’ Top Pick of 2025
Still, Broadcom is a popular name on Wall Street.
Bank of America named Broadcom a top candidate for the semiconductor industry in 2025, naming it an “AI leader” along with Nvidia and Marvell Technology (MRVL).
And JPMorgan, which called the stock a “best buy” when it raised its price target to $250 last week, said Broadcom’s AI revenue could jump another 40% in fiscal 2025, and growth will continue. Accordingly, the company expects its market share to increase over the next few years. its customer base.
“Stock prices are clearly subdued,” said Morgan Stanley analysts, who told clients they “expect momentum to pick up from here.” They wrote that Broadcom could offer “one of the most attractive paths to the AI semifinals in the next few years” after Nvidia.
