Since the beginning of last year, we can no longer avoid the impact of artificial intelligence (AI) in technical circles Broadcom (NASDAQ:AVGO) is a major player in the space. The company’s semiconductors and data center infrastructure play a crucial role in the AI ecosystem, which has lit a fire under the stock. The price has almost doubled in the past year, resulting in a high-profile stock split.
In the wake of Broadcom’s better-than-expected results, Wall Street is trying to revise its models, resulting in a flood of higher price targets. One of these must be of particular interest to shareholders.
AI controls this train
Analysts at Benchmark reiterated their buy rating and raised their price target on Broadcom to a Street high of $2,100. That represents a potential upside for investors of 40% over the next year, compared to the stock’s closing price on Wednesday.
The analysts called Broadcom’s “solid” second-quarter financial results and 10-to-1 stock split “enough to send the Street into a buying frenzy.” They further pointed out that Broadcom’s increased prospects were modest and that its AI guidance was “rather conservative.”
I think the analysts are on to something. AI is quickly becoming a boon for Broadcom. In the company’s second quarter report, management noted that results were “once again driven by demand for AI” as sales of AI products reached a record $3.1 billion, or 25% of total revenue.
Despite the robust profits, Broadcom raised its full-year guidance from $50 billion to $51 billion, an increase of about 2%. This suggests that management was cautious, which opens the door for a future beat and raise.
Broadcom shares are currently selling for 35 times forward earnings, which is an attractive price for a stock that has generated 2,230% returns over the past decade. More are likely to follow, which is why Broadcom is a buy.
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Danny Vena has no positions in any of the stocks mentioned. The Motley Fool recommends Broadcom. The Motley Fool has a disclosure policy.
Will Broadcom Stock Hit $2,100 After Announcing a 10-for-1 Stock Split? 1 Wall Street analyst thinks so. was originally published by The Motley Fool
