Bernstein raises Broadcom stock price target to $400 on AI strength

Broadcom (AVGO) reported strong fiscal Q3 2025 results, surpassing revenue and earnings expectations, primarily driven by a 63% year-over-year surge in AI semiconductor revenue to $5.2 billion. This performance, alongside CEO Hock Tan's contract renewal through 2030, has led multiple analysts, including Bernstein, Rosenblatt, and JPMorgan, to raise their price targets to $400, reflecting confidence in Broadcom's AI leadership and future growth trajectory. The upgrades highlight the company's strong execution and its increasingly pivotal role in the AI hardware landscape.

Analysis

Broadcom's (AVGO) fiscal third-quarter 2025 results significantly surpassed analyst consensus, with revenues of $16 billion and EPS of $1.69 driven by exceptional performance in its artificial intelligence segment. AI semiconductor revenues surged to approximately $5.2 billion, a 63% year-over-year increase, underscoring the company's pivotal role in the AI hardware supply chain. This strength in AI contrasts with a slower recovery in non-AI semiconductor segments. The company's fundamentals remain robust, evidenced by a 77.2% gross profit margin and 28% revenue growth over the last twelve months. The bullish outlook is reinforced by CEO Hock Tan's contract extension through 2030 and a wave of analyst price target upgrades. Notably, Bernstein, Rosenblatt, and JPMorgan have all converged on a $400 price target, with Bernstein's valuation predicated on an expanded multiple of 35 times higher forward earnings estimates for fiscal years 2026/2027, signaling strong confidence in sustained, material earnings growth.

Key Decisions for Investors

• Given the strong earnings beat, a clear AI-driven growth narrative, and broad-based analyst upgrades, investors should recognize the significant positive momentum behind the stock, which is currently trading near its 52-week high.
• Investors should closely monitor the performance of the non-AI semiconductor business, as its noted slow recovery represents a key variable; any acceleration in this area could provide an additional catalyst for growth.
• While the outlook is strong, the stock's valuation is now based on a premium forward P/E multiple of approximately 35x, so it is prudent to assess whether the pace of AI-related earnings growth can continue to justify this valuation.