Bank of America thinks chipmaker Broadcom can thrive in the ongoing artificial intelligence boom. The bank raised its price target on the stock to $950 from $800 and reiterated its buy rating. BofA’s new forecast represents more than 20% upside compared to the stock’s $789.95 close on Thursday. Analyst Vivek Arya said that while BofA is taking “a conservative approach” in models on Broadcom, exposure to AI could amount to roughly 20% of total sales while the company’s core semiconductor business can grow between 2% and 3%. This outlook contributes to BofA’s forecast of fiscal year 2024 sales and earnings per share of $39.4 billion and $46.59 per share, respectively. Broadcom could add more to sales and EPS thanks to AI exposure. “In a bull case scenario where AVGO can grow AI exposure to ~25% of sales (and hold growth rates of non-AI assets at previously mentioned levels), we see incremental $2bn/$3 upside to our sales/EPS estimates,” Arya said, calling the company’s AI portfolio “underappreciated.” The stock has been looped up into the rising tide of AI beneficiaries with a 41% gain in 2023. AVGO YTD mountain Broadcom stock has added nearly 42% from the start of the year. — CNBC’s Michael Bloom contributed to this report.
