On Friday, Piper Sandler demonstrated confidence in Broadcom Limited (NASDAQ:AVGO) shares, raising the company's price target to $250 from the previous $200 while maintaining an Overweight rating. This adjustment follows Broadcom's robust fourth-quarter performance and favorable projections for January.
The company's artificial intelligence (AI) segment was highlighted as a key driver of growth, with a significant increase in AI revenues from approximately $3.8 billion in 2023 to an estimated $12.8 billion in FY24. In contrast, Broadcom's non-core business has seen a decline in the range of over 20% during the same period.
Broadcom's AI business is expected to maintain its rapid expansion, and the company has presented a serviceable available market (SAM) between $60 billion and $90 billion with its three existing AI customers. This estimate marks a substantial rise from the current SAM of about $15 to $20 billion.
It is important to note that this forecast does not account for potential business with two new customers that have not been announced yet, but it does encompass networking and other AI chips, including GPUs from merchant vendors.
Reiterating the Overweight rating, Piper Sandler's endorsement comes on the heels of Broadcom's strong results and the clear trajectory for revenue visibility extending to 2027. The revised price target reflects the firm's confidence in Broadcom's strategic focus and market opportunities within the AI sector.
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