1 Wall Street Analyst Thinks Broadcom Is Going to $260. Is It a Buy Now?

Shares of Broadcom (NASDAQ: AVGO) are suddenly soaring. The diversified semiconductor company impressed the market with its fiscal 2024 fourth-quarter earnings report last week, in particular its artificial intelligence (AI) growth.

Broadcom, which may be best known for networking chips, has become the No. 2 chip stock behind Nvidia in the AI race, and the company now seems to be fulfilling that promise.

Start Your Mornings Smarter! Wake up with Breakfast news in your inbox every market day. Sign Up For Free »

The company said AI revenue jumped 220% to $12.2 billion in the fiscal year due to the growth of its AI XPUs and "Ethernet networking portfolio." That made up nearly half of its $30.1 billion semiconductor revenue in the year. Now, Wall Street is taking notice with a number of analysts upgrading the stock and raising price targets in the aftermath of the report.

Image source: Getty Images.

Truist expects more gains for Broadcom

Among the analysts reaffirming their bullishness on Broadcom was Truist, which raised its price target from $245 to $260 per share and reaffirmed its buy rating, according to media reports.

The price target hike was the bank's second since Broadcom reported last week, reflecting the stock's post-earnings surge as it is now up 33% as of Dec. 17. Based on the $260 price target, Truist believes Broadcom has near-term upside of 8%.

Truist was particularly impressed by management's forecast that demand from three of its ASIC (custom chip) customers will reach $60 billion to $90 billion by fiscal 2027, implying a compound annual growth rate of 20% to 30% over the next three years.

Is Broadcom a buy?

Broadcom has been a longtime winner on the stock market, and today, the company is one of the most valuable companies in the world with a valuation topping $1 trillion.

Thanks to strategic acquisitions and organic growth, Broacom is well positioned to capitalize on AI demand. The stock still looks like a strong buy.

Should you invest $1,000 in Broadcom right now?

Before you buy stock in Broadcom, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Broadcom wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $790,028!*

Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.

See the 10 stocks »

*Stock Advisor returns as of December 16, 2024

Jeremy Bowman has positions in Broadcom. The Motley Fool has positions in and recommends Nvidia and Truist Financial. The Motley Fool recommends Broadcom. The Motley Fool has a disclosure policy.