Bank of America analyst Vivek Arya has increased his price target for Broadcom, predicting that the semiconductor company’s sales growth will double as a result of the AI trend. Arya now believes the stock could rise by 30% to $2,150, making it his top pick. He expects sales growth to increase to a compound annual rate of 13% between 2024 and 2026, driven by a 24% growth rate in AI-connected silicon and VMWare businesses. Arya sees these units accounting for more than half of Broadcom’s total sales soon.
Arya points to Broadcom’s diverse growth drivers, strong management team, and track record of capital appreciation and dividend growth as reasons to justify a premium multiple. He notes that the stock has transitioned from value to growth and has set a price target based on a multiple of 35 times calendar-year 2025 earnings, within the range of peers. However, he warns that changes in sentiment or fundamentals around AI could impact the stock’s performance.
Broadcom’s shares have surged more than 45% this year, outperforming the iShares Semiconductor ETF and the Nasdaq Composite as AI continues to attract traders’ interest. This growth has been driven by the AI craze, with Arya confident that Broadcom has significant room for growth in the coming years. Investors will be watching closely to see if Broadcom can meet Arya’s optimistic sales growth projections and maintain its position as a top pick in the semiconductor industry.
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https://www.cnbc.com/2024/06/24/bank-of-america-says-broadcoms-sales-growth-to-double-raises-price-target-even-higher.html
