Broadcom Corporation (NASDAQ: AVGO) has been a known AI stock for some time. What was not as well-known was exactly to what extent its AI-related business would be able to revalue the entire company’s valuation. When Broadcom reported earnings, its 2024 revenue growth of 44% to a record $51.6 billion sounded impressive enough on the surface and was more or less in-line with expectations. And the infrastructure software revenue growth to $21.5 billion after the integration of VMware sounded impressive. And semiconductor revenue rising to a record $30.1 billion was also impressive.
Where Broadcom has issued a “wow-factor” was inside its semiconductor data showing that AI revenue of $12.2 billion rose 220 percent year-over-year. This growth was driven by Broadcom’s AI XPUs and Ethernet networking portfolio, enough to make Broadcom the latest $1 trillion company by market cap. This AI-boost, and perhaps this alone, has caused a re-rating on its valuation and strategic investors are paying closer attention for 2025. But one thing every investor should be asking — where should the rest of the company should be valued with in-line expectations?
Broadcom’s shares rose by some 24% to $224.80 the day after the earnings report’s closing price of $180.66. Now Broadcom has a $1.05 trillion market cap. While the growth was a tad better than expected, investors are latching on to Broadcom’s AI exposure here. By applying AI-related corporate multiples it gives Broadcom that much more valuation — hence a re-rating by Wall Street. Now investors are paying up by more than 20% for a slightly higher guidance profile. In this case it was worth nearly a $200 billion bump in its market cap in just a single day.
The stock closed near the highs of the trading day, and it did so on a massive volume spike. Its 119 million shares that traded on Friday was nearly 6-times its normal trading volume of a full day. And, again, that was nearly $200 billion in added value overnight.
Oggonomics has tracked well over a dozen analyst reports calling for a much higher stock price in 2025. Wall Street has tried to play catch-up over the great growth in the AI spending that is boosting Broadcom. There is no doubt nor question about how impressive the AI-related spending was. What’s impressive even above the nearly $200 billion in added market value is that Wall Street is assigning even much more upside than that for 2025. These have been listed alphabetically by the firm name and their reiterated ratings, followed by the price targets and then followed by analyst notes on half of the calls.
BofA (Buy) target to $250 from $215… raised FY2025 and FY2026 EPS estimates by 5% (to $6.27 and 3% (to $7.50) and calls it a surging AI opportunity for the customizable chip leader.
Deutsche Bank (buy) target to $240 from $190… solid quarter and solid guidance, but offers more meaningful upside to long-term AI growth expectations reaching a serviceable and addressable market of $60 billion to $90 billion by 2027.
JPMorgan (Overweight) target to $250 from $210… solid results on continued strong AI growth offsetting lower software revenue. Broadcom remains its top semiconductor pick.
KeyBanc (Overweight) target to $260 from $210… in-line Q4 but guided Q1 higher, with weaker infrastructure software sales offset with strong AI networking and wireless revenues.
Morgan Stanley (Overweight) target to $233 from $180… In-line quarter and outlook likely is a relief versus fears of worse around Google transition and the longer-term AI commentary will add to longer-term enthusiasm. The firm expects its momentum to build from here over the course of 2025.
TD Cowen (Buy) target to $240 from $210… despite an inline report, the huge addressable market and new custom builds show confidence in Broadcom’s AI opportunity.
Many other firms had similar reports:
- Baird ((Outperform) target to $210 from $195
- Benchmark (Buy) target to $255 from $210
- Citigroup (Buy) target to $220 from $205
- Evercore ISI (Outperform) target to $250 from $200
- Jefferies (Buy) target to $225 from $205
- Piper Sandler (Overweight) target to $250 from $200
- Rosenblatt (Buy) target to $250 from $240
- Susquehanna (Positive) target to $225 from $200
- Truist (Buy) target to $245 from $205
- UBS (Buy) target to $220
Oggonomics always reminds its readers and investors that no single analyst report should ever be the sole basis to buy or sell a stock. The same is true for when more than a dozen analysts are all reiterating their rating and boosting their price targets handily after the news is out rather than ahead of the news. That is where the re-rating by Wall Street comes into play.
Any decision to buy or sell (or hold or short sell) is up to each investor and the decision should be made with a financial advisor. There are of course no assurances that any of the price predictions and the scenarios that back any of these analyst calls up will actually come to fruition. It is not uncommon for analysts to get caught up in the same frenzies that investors get caught up in. And always keep in mind that analyst price targets are generally stated as 12-month targets.
