On Thursday, BofA Securities expressed a reinforced positive stance on Broadcom Limited (NASDAQ:AVGO), maintaining a Buy rating and a $1,680.00 share target. This affirmation follows Broadcom's event, "Enabling AI in Infrastructure," which bolstered confidence in the company's growth prospects through fiscal year 2025.
The event highlighted Broadcom's expansion into artificial intelligence accelerators and high-speed switching technologies, which are anticipated to significantly contribute to revenue growth.
Broadcom reiterated its AI sales forecast, projecting over $10 billion in fiscal year 2024, marking an increase of more than 140% year-over-year. The company announced the addition of a third custom AI ASIC customer, expected to ramp up later this year in a multi-year engagement.
This development is already factored into the current AI sales outlook. Broadcom also showcased its leading position in high-speed Ethernet switches, which are deemed crucial for supporting an anticipated surge in AI accelerator clusters.
The company introduced "Bailly," its industry-first co-packaged optics solution, now being sampled to customers. This innovation could potentially disrupt the market for pluggable transceivers that incorporate Marvell's (NASDAQ:MRVL) digital signal processors (DSPs). However, near-term market expansion is likely to benefit both technologies. Broadcom also presented updates to its PCIe connectivity platform and announced the availability of its 3nm 200G SerDes, named "Condor."
Broadcom's announcement of 200G/lane integrated DSPs for its next-generation 1.6T products was another highlight of the event. The company's strategic focus on AI component supply is expected to drive its AI sales to surpass $14 billion by calendar year 2026, representing a compound annual growth rate (CAGR) of over 50%.
Additionally, a cyclical recovery in non-AI semiconductors and increased revenue from VMware (NYSE:VMW) are projected to contribute to Broadcom's growth into fiscal year 2025.
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