💎 Fed’s first rate cut since 2020 set to trigger market. Find undervalued gems with Fair ValueSee Undervalued Stocks

Bernstein stays confident on Broadcom shares, maintains Outperform amid positive outlook

EditorAhmed Abdulazez Abdulkadir
Published 06/09/2024, 12:06
AVGO
-


On Friday, Bernstein SocGen Group maintained its positive outlook on Broadcom Limited (NASDAQ:AVGO), reiterating its Outperform rating and a $195.00 price target for the company's stock. The firm's analysis indicates that Broadcom's non-AI semiconductor businesses seem to have reached a turning point, with some beginning to show growth again. The company has experienced a significant increase in orders, growing at a rate of over 20% for the past few quarters.


The analyst noted that the current order growth suggests a potential recovery over the next two to four quarters, which could position the company for a stronger performance next year. The AI segment of Broadcom's business, in particular, was highlighted for its high demand and the anticipation of robust growth in the upcoming year.


Broadcom's recent performance in its VMware (NYSE:VMW) operations was also a point of emphasis, as it notably exceeded expectations during the quarter. The analyst expressed confidence in VMware's potential for continued growth. Based on these observations, Bernstein SocGen Group has raised its estimates for Broadcom while maintaining the $195 price target and Outperform rating.


The firm's analysis suggests that Broadcom's valuation is becoming increasingly attractive, especially after a recent pullback in the stock's price. The analyst concluded by stating that the company's financial numbers are likely to continue improving, supporting the maintained price target and rating.


In other recent news, Broadcom Limited has reported robust growth in its artificial intelligence (AI) segment, leading to an increased fiscal 2024 AI revenue forecast of $12 billion. This growth is primarily driven by a surge in demand for Broadcom's custom chips and networking equipment. Despite a net loss of $1.88 billion due to a one-time non-cash tax provision, the company's third-quarter revenue surpassed expectations at $13.07 billion, marking a significant year-over-year revenue increase of 47% to $13.1 billion.


Broadcom's VMWare bookings are gaining momentum, with a $4 billion revenue target for the upcoming quarter, exceeding previous management expectations for FY25. Analyst firms such as JPMorgan (NYSE:JPM), Piper Sandler, and Cantor Fitzgerald have expressed confidence in Broadcom's strategic positioning, with JPMorgan increasing its price target from $200 to $210, and both Piper Sandler and Cantor Fitzgerald maintaining a $200 target.


Broadcom has also made significant strides in software, particularly with VMware, achieving high software renewal rates and conversion/upsell to its VCF full stack solution. The company introduced VMware Tanzu Platform 10 and Tanzu AI Solutions, aimed at simplifying cloud-native application development, and launched a new initiative called Catalyst to enhance its Accelerate Program by engaging elite Enterprise Security Group partners.


InvestingPro Insights


Continuing the positive outlook on Broadcom Limited (NASDAQ:AVGO), real-time data from InvestingPro aligns with Bernstein SocGen Group's analysis. Broadcom's market capitalization stands robust at $711.36 billion, reflecting the company's significant presence in the industry. Additionally, the company's revenue has grown impressively, with a 32.04% increase over the last twelve months as of Q3 2024. This growth trajectory is further evidenced by a substantial quarterly revenue growth of 47.27% in Q3 2024.


InvestingPro Tips highlight Broadcom's commitment to shareholder returns, with the company raising its dividend for 14 consecutive years and maintaining dividend payments for 15 consecutive years. This consistency is a testament to the firm's stability and reliability for investors seeking income alongside growth. Furthermore, analysts anticipate sales growth in the current year, which aligns with the high demand and growth potential noted in Bernstein SocGen Group's analysis, particularly in the AI segment.


For investors looking for more in-depth analysis, InvestingPro offers additional tips that delve into Broadcom's financial health and market performance. There are 14 more InvestingPro Tips available, providing a comprehensive view of the company's valuation multiples, profitability, and analysts' predictions for profitability this year. These insights can be accessed by visiting: https://www.investing.com/pro/AVGO.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.