Wolfe Research Upgrades Broadcom to Outperform, $400 Price Target
Wolfe Research analyst Chris Caso upgraded Broadcom Limited (NASDAQ: AVGO) from Peer Perform to Outperform with a price target of $400.00.
“We upgrade AVGO to Outperform with a PT $400. We can no longer ignore the growth / competitiveness TPU, which checks suggest will grow to 7mn units annually by CY28.
GOOGL’s willingness to make TPU available to 3rd parties creates a true competitor to NVDA, and we expect AVGO to remain the main beneficiary.
As a result, we raise our CY27 ests to $154.5bn / $16 EPS, resulting in a 21x multiple.
Further upside to our CY27 estimates can be driven by other XPU ramps not in numbers – Meta, OAI, etc.
Estimates. We revise our CY26 AI ASIC revenue ~$44bn, reflecting 3.3mn TPU shipments, and revise our CY27 AI revenue to $78.4bn, reflecting ~5.1mn TPU shipments.
We assume TPU drives the majority of XPU growth, with all other projects 17% / 14% of XPU revenue in CY26/CY27, respectively.
We model Networking revenue $15.1bn or up ~75% y/y in CY26, consistent with our NVDA Networking revenue estimate; we model CY27 AI Networking revenue up ~55% y/y.
We leave our non-AI semis & Infrastructure Software estimates unchanged. Valuation.
We see ~$16 in EPS by CY27, putting the stock at a ~25x multiple, with a bull case of ~$18 EPS if AVGO can double its AI revenue again in CY27.
Our PT of ~$400 represents ~22x our bull case earnings power of $18, below AVGO’s 3-YR average ~25x multiple (i.e., since the beginning of the AI spending cycle).”
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