Aletheia Capital Raises Broadcom Price Target to $525
Since this note−16% AVGO $421.86 → $352.53 (Oct 2) · moving away from the target
Aletheia Capital analyst Stefan Chang raised the price target on Broadcom Limited (NASDAQ: AVGO) to $525.00 (from $500.00) while maintaining a Buy rating.
“AVGO will report F2Q result and F3Q guidance on 3 June after trading hours. We believe the near-term numbers are less important than the company’s comments on TPU.
We believe Google has reshuffled its inferencing TPU plan to use TPUv8i (and possibly TPUv8i+) for 2027/28E. Whether AVGO’s next-gen TPU (likely called Merope) will be pulled in remains to be seen.
From a numbers’ perspective, we do not see any downside risk to our F26/27E revenue and earnings, thanks to strong inferencing demand and rising networking value.
However, if we are proven right that AVGO will skip TPUv9 (while MTK will not), AVGO’s value proposition to Google and its valuation multiple will need a revisit.
We maintain a BUY rating on AVGO and raise our TP from $500 to $525; this is based on higher F27E earnings but lower P/E target (from 28x to 25x) to factor in the rising uncertainties.
Upside risks include rising inferencing demand, while the key downside risk is Google’s pace for its COT adoption.”
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