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Bank of America predicts that Broadcom’s sales growth will double due to AI and raises price target further

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Bank of America analyst Vivek Arya has raised the price target for Broadcom to $2,150, anticipating that the company’s sales growth will double in the coming years due to the artificial intelligence trend. This would represent a 30% increase from the previous week’s closing price. Arya predicts that sales growth will increase at a compound annual rate of 13% between 2024 and 2026, driven by a 24% compound annual growth rate in the AI-connected silicon and VMWare businesses. These units are expected to account for more than half of the company’s total sales. Arya is confident in Broadcom’s diverse growth drivers, strong management team, and track record of capital appreciation, dividend growth, and market-beating dividend yield.

Arya’s new price target is based on a multiple of 35 times earnings in the 2025 calendar year, falling within the range set by industry peers of between 18 and 37. However, he cautions that any shifts in sentiment or fundamentals around AI could impact the stock’s performance. The stock has already surged more than 45% this year as investors have shown increased interest in AI technologies. This growth has outpaced both the iShares Semiconductor ETF (SOXX) and the tech-heavy Nasdaq Composite index. Arya believes that Broadcom has transitioned from being perceived as a value stock to a growth stock, reflecting the company’s strong potential for continued expansion in the AI market.

Broadcom’s unique market position and strong growth potential have prompted Arya to reiterate his buy rating and top-pick designation for the stock. He highlights the company’s ability to deliver consistent capital appreciation, dividend growth, and above-market dividend yield. The analyst views Broadcom’s growth drivers, management team, and portfolio favorably and believes that these factors justify a premium valuation for the stock. As the AI trend continues to gain momentum and drive industry growth, Arya sees significant opportunities for Broadcom to capitalize on the demand for AI-connected silicon and VMWare technologies.

In conclusion, Bank of America’s Vivek Arya is bullish on Broadcom’s future prospects, citing the company’s potential for significant sales growth driven by the AI trend. Arya’s price target of $2,150 represents a 30% upside potential from the current price level. He emphasizes Broadcom’s solid growth drivers, strong management team, and track record of delivering value to shareholders as key reasons for his positive outlook on the stock. As the company continues to expand its presence in the AI and silicon markets, Arya believes that Broadcom is well-positioned for further success in the years ahead.

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