Melius Maintains Buy on Broadcom, $283 Price Target

Melius analyst Ben Reitzes reiterated a Buy rating and $283 price target on Broadcom Limited (NASDAQ: AVGO).

“AVGO is Still One of the “Must-Own” AI Stocks: AVGO benefits from leadership as a fabless semiconductor provider across many categories – but its Networking division (31% of revenues overall) should drive upside with AI accelerators (XPUs) and networking chips largely sold into hyperscaler datacenters.

Broadcom’s engagements for custom XPUs span elite companies like Google, Meta and Bytedance, to the next-generation of AI companies, like OpenAI.

Many of these companies dual source compute from both Nvidia and Broadcom for flexibility around different workloads – but all remain committed to both.

Broadcom can provide multiple chips for each customer, balancing their needs for both high performance and cost- effective performance across a wide range of training and inference workloads.

This capability at hyperscalers uniquely positions Broadcom to capture a large size of the AI compute market long-term.

In addition to the 4 companies mentioned above, we believe that Broadcom has likely added ARM/Softbank, Elon Musk companies, Apple and perhaps even one more hyperscaler to their mix for custom AI accelerators – lending upside to AI semis estimates even after 2027.

We believe Broadcom also boasts one of the stronger senior management teams in our coverage universe with CEO Hock Tan known as an excellent operator and the President of the Semiconductor Group, Charlie Kawwas, aptly leading that division toward the AI promised land.”

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