Rating
Buy
Price target
$550
Previous
$525
Implied upside
+15%

Bernstein SocGen Group analyst Stacy Rasgon raised the price target on Broadcom Limited (NASDAQ: AVGO) to $550.00 (from $525.00) while maintaining an Outperform rating.

“Broadcom’s FQ226 earnings were solid ($22.2B/$2.44 vs the Street $22.1B/$2.39) with semis better and software slightly worse than expected.

AI semis were ~$10.8B, up 143% YoY, above expectations ($10.7B); non-AI semis also strengthened. FQ326 guidance was mixed.

Revenue and EPS outlook beat but driven by SW and non-AI semis with AI semis (while objectively strong) seen a touch below (overall results at $29.4B/~ $3.25 vs Street $28.6B/$3.15).

AI is seen at ~$16B, up >200% YoY but below the street at ~$17.2B, (though implied FQ4 AI at ~$21B appears in-line).

Software at ~$8.9B is seen well above the street at ~$7.6B as agentic AI and consequent CPU demand drives VMWare sales.

Gross margins are seen down ~300bps to ~74%, a bit below consensus due to product mix.

We suspect the shares may take a pause for the next couple of quarters. But the story gets interesting again once we enter 2027.

And at the end of the day we have a company growing revenues and EPS >50%, with gross/operating margins in the 70s/60s, and potentially trading at a teens P/FE in an environment that is only getting stronger.

If we have to wait a quarter or two for that story to re-emerge that’s OK, we’ll wait for it.”

This research note is reproduced verbatim from the issuing firm. Price Target never edits, paraphrases or alters analysts’ words — we only republish them in one place.

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