Bernstein Affirms Outperform on Broadcom, $400 Price Target

Bernstein SocGen Group analyst Stacy Rasgon reiterated an Outperform rating and $400 price target on Broadcom Limited (NASDAQ: AVGO).

“Margin impact less clear, but opportunity for substantial positive EPS revisions.

Margin implications from AI buildout have been on investors’ minds, and our conversation with Hock last week did suggest AI revenue growth would come at the expense of somewhat lower margins, but we did not get the impression that gross margins, even if requiring some reset, needed to plummet (presumably the current OpenAI deal was in the works at the time of the conversation).

For the record, we do believe Street gross margin estimates are likely too high; however we have been of the belief that revenue estimates are likely too low (which today’s announcement supports), and we see considerable opportunity for further positive EPS revisions from here.”

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