Broadcom (AVGO) stock got a bullish boost from analysts – Magic Post

Broadcom today

$324.63 -20.39 (-5.91%)

As of 04:00 PM ET

52 week range

$138.10

▼

$374.23

Dividend yield

0.73%

P/E ratio

82.81

Price target

$357.22

Since shares of semiconductor giant Broadcom reached an all-time high closing price of around $369 on September 10. Nasdaq:AFGO I calmed down, sliding 6% from that peak.

However, that didn’t stop one Wall Street analyst from matching Broadcom’s more bullish price target.

Below, we’ll review the latest price target data on Broadcom.

We will also provide perspective on an emerging opportunity: combined optics (CPO).

It could become an important driver of growth over the long term, providing further support for AVGO’s investment thesis.

KeyCorp analyst joins Broadcom’s $400+ price target club

On September 30, KeyCorp analyst John Finn became the latest forecaster to raise Broadcom’s price target above $400. Vihn raised his target on Broadcom by 5% from $400 to $420. Vihn’s target is now tied for the most bullish target ever tracked by MarketBeat. Analyst Arthur Lai set a $420 price target on AVGO two weeks ago. Additionally, the number of analysts with price targets above $400 moved from two to three. It’s clear that analysts continue to be increasingly bullish on Broadcom shares, with many clustered around targets above $400. Vihn and Lai’s targets indicate a very significant upside for AVGO shares of approximately 22%.

However, their targets stand in stark contrast to MarketBeat’s consensus forecast of around $357. This number indicates only a 3.5% upside for AVGO shares. However, there is a happy medium between these numbers. Among the price targets updated after Broadcom’s September 4 earnings call, the average price target was $384, suggesting a solid 11.3% upside.

Ultimately, this is the best measure of overall analyst sentiment on Broadcom. It includes the company’s latest financial statements and provides different interpretations of them. While this level of upside potential is not eye-catching, it is encouraging for a great stock that has performed very well.

Long-term potential: Together packaged optics may be the next frontier for Broadcom

Price targets can provide perspective on where a stock may be heading in the near term. However, staying aware of long-term opportunities is just as important. The ability to create long-term growth is one reason why it’s so difficult to bet against Magnificent Seven stock. Their massive cash flows allow them to invest in technologies that may not help them today, but could be huge in the future. This helps their stock prices continue to rise over time, even if certain parts of their business begin to decline.

Over the past 12 months, Broadcom generated $25 billion in free cash flow, ranking in the top 10 among all U.S. stocks. This clearly gives the company great ability to invest in emerging growth areas.

One such area is combination optics (CPOs). CPOs are a form of interconnection between semiconductors. A piece of hardware that connects the chip to the cable. Currently, most semiconductor interconnects are copper-based. This limits bandwidth and cable length, while also requiring more power and cooling. Optical links, which transmit data via light rather than electricity, alleviate these problems. As artificial intelligence (AI) data centers grow larger and more complex, optical interconnects are likely to see a significant increase in demand. It may not take long for this demand to be fulfilled. CEO Hock Tan believes AI data centers will start moving to optical interconnection “within a year or two”.

Optical interconnects can be removable (plugable) pieces of equipment or integrated directly on a chip. Direct integration is what makes the optics “co-assembled”. Hock Tan describes CPOs as a “dream” in the sense that they are the ultimate form of semiconductor interconnects. This is because CPOs use 65% less power than pluggable optics, which already offers significant improvements over copper. However, optical communications historically have had failure rates of 5% to 8%. This makes integrating them into a segment very risky. If the connection fails, one might have to replace the entire $40,000 chip, rather than just replacing the pluggable interconnect.

However, in a recent test in Meta Platforms Nasdaq: MetaBroadcom’s CPO technology demonstrated 1 million link hours Without interruption of communication. Converge Digest says this test and other data “Highlighting a turning point for CPO reliability, positioning it as a viable solution for hyperscalers.“This is a big win for Broadcom as it looks to capitalize on the CPOs opportunity.

The bullish outlook for AVGO continues

Overall, analyst price targets for Broadcom remain on the rise. The company’s opportunities through AI Semiconductor and VMware are plentiful. Additionally, evidence suggests that CPO technology could emerge as a new growth driver for Broadcom over the coming years.

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