Broadcom (NASDAQ:AVGO) has experienced a remarkable 96% increase in its shares over the past year, driven by a growing demand for its artificial intelligence chips. Analysts believe that the semiconductor giant is well-positioned to maintain its momentum as it shifts from being a value stock to a growth stock. Bank of America’s Vivek Arya, known for his accurate predictions, is optimistic about AVGO’s future growth potential.
Arya predicts that AVGO’s traditional semiconductors and software will see a growth rate of 5-10% in the near future, but expects this to double to a 13% CAGR between FY24-26, driven by a 24% CAGR in AI silicon and VMware sales. He also believes that AVGO’s diverse growth drivers, strong management team, and solid track record justify a premium valuation for the company. Furthermore, Arya expects AVGO’s EPS to potentially reach $80 per share by FY26, with a positive outlook for continued growth.
Despite its strong performance, there are risks associated with investing in AVGO, including customer concentration, high debt levels, and competition from other companies in the industry. Nonetheless, Wall Street analysts are bullish on the stock, with a Strong Buy consensus rating based on recent Buy reviews. The average price target for AVGO suggests a potential return of around 20% over the next year.
Arya has raised his price target for AVGO to $2,150, representing a 35% increase from the current levels. He maintains his Buy rating on the stock and believes that AVGO’s growth prospects, especially in the AI sector, justify a positive outlook. However, investors are advised to conduct their own analysis before making any investment decisions.
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