Bernstein SocGen Raises Broadcom Price Target to $550
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.”
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