Broadcom Is A Buy For 'AI, Dividends And M&A Benefits,' Analyst Says: Takeaways From Q4 Earnings

Broadcom Inc (NASDAQ: AVGO) shares were down on Friday, even after the company reported upbeat fourth-quarter results.

The results came amid an exciting earnings season. Here are some key analyst takeaways from the release.

JPMorgan On Broadcom

Analyst Harlan Sur maintained an Overweight rating while lifting the price target from $1,550 to $1,700.

Broadcom delivered better-than-expected quarterly results and reiterated its full-year outlook of $50 billion in revenues and 60% EBITDA margin, “on sustained momentum in semiconductors and solid growth in its mission critical software franchise,” Sur wrote in a note.

“For its semiconductor business, the team saw accelerating demand for its AI solutions ($2.3B in the Jan-Qtr, up 50%+ Q/Q) which offset weakness in its core diversified semi business (ex-AI ~$5.1B down 12% Q/Q,” Sur added.

Goldman Sachs On Broadcom

Analyst Toshiya Hari maintained a Buy rating while bumping the price target from $1,325 to $1,550.

Broadcom delivered “solid” results for the quarter, with non-GAAP earnings beating Street expectations by 6% “on strength in the AI semiconductor business and strong synergy capture immediately following the VMware acquisition,” Hari said.

The analyst recommended “use any stock price weakness as an opportunity to add to positions,” given the company’s “robust competitive position in AI and its ability to extract better growth and margins in Software intact.”

BofA Securities On Broadcom

Analyst Vivek Arya reaffirmed a Buy rating while raising the price target from $1,500 to $1,680.

“As expected, AVGO maintained its FY24 sales outlook of $50bn, though with mix shifting more towards AI (now >$10bn vs $7.5bn prior), with traditional enterprise (server storage) and telco segments experiencing the same inventory digestion as indicated by peer MRVL and others,” Arya wrote.

“VMWare is also off to a strong start, with overall AVGO software bookings to nearly double QoQ to $3bn in Q2 and with VMWare sales expected to grow 10% QoQ every quarter,” he added.

Check out other analyst stock ratings.

Truist Securities On Broadcom

Analyst William Stein reiterated a Buy rating while raising the price target from $1,240 to $1,566.

Broadcom’s AI exposure grew meaningfully in the quarter and the company’s outlook reflected “overwhelming downside from a cyclical bottoming in non-AI semis, esp. storage & broadband,” Stein said.

“Notwithstanding the weaker storage & broadband performance, the incremental AI accelerator customer and growing revenue drives upside to our estimates & the multiple,” the analyst wrote. “Buy for AI, Dividends and M&A benefits,” he added.

Mizuho Securities On Broadcom

Analyst Vijay Rakesh reaffirmed a Buy rating while lifting the price target from $1,550 to $1,625.

Broadcom’s quarterly results were “strong” and its full-year guidance of $50 billion now includes a contribution of around $10 billion from AI, versus about $8 billion earlier, Rakesh said.

“Networking/AI was the F24E driver,” the analyst stated, adding that the revenue guidance has VMWare still contributing around $12 billion.

Oppenheimer On Broadcom

Analyst Rick Schafer reiterated an Outperform rating and price target of $1,500.

“Mgmt increased FY24 AI-related sales expectations from $7.5B to $10B, split 70/30 ASIC/networking,” Schafer wrote. The velocity of AI ASIC orders is picking up at Alphabet (NASDAQ: GOOG)(NASDAQ: GOOG) and more recently at Meta Platforms Inc  (NASDAQ: META), he added.

“AI-leveraged DC portfolio and software drives predictable growth and FCF,” the analyst further stated.

AVGO Price Action: Shares of Broadcom had declined by 6,53% to $1,315.66 at the time of publication on Friday.

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