On Friday, Goldman Sachs (NYSE:GS) maintained a Buy rating on Broadcom Limited (NASDAQ:AVGO) and increased the price target to $1,550 from the previous target of $1,325. The firm acknowledged Broadcom's impressive performance in its fiscal first quarter, highlighting the company's non-GAAP earnings per share (EPS) of $10.99, which surpassed the Street consensus by 6%.
This success was attributed to the strength of Broadcom's artificial intelligence (AI) semiconductor business and the immediate synergistic benefits following the acquisition of VMware (NYSE:VMW).
The analyst noted that while the market might have anticipated a more positive revision of the company's fiscal year 2024 outlook, which could lead to a near-term correction in the stock price, investors are advised to view any dips in share price as an opportunity to increase their holdings.
Broadcom's competitive position in the AI sector and its capability to drive growth and improve margins in its software division were emphasized as key factors in maintaining the Buy rating.
Broadcom's recent quarter's performance exceeded expectations, with the company's AI semiconductor business playing a significant role in its financial success. The firm also successfully captured synergies right after its acquisition of VMware, which contributed to the strong quarter.
The updated price target represents a 14% potential upside from the after-hours price of $1,361. Looking ahead, Goldman Sachs highlighted Broadcom's AI and Networking Investor Day on March 20, 2024, as a forthcoming event that could act as a catalyst for the company's stock. This event is expected to provide investors with deeper insights into Broadcom's strategies and performance within the AI and networking sectors.
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