Rosenblatt lifts Broadcom stock price target to $340 on AI growth

Rosenblatt raised its Broadcom (AVGO) price target to $340 from $223, maintaining a Buy rating, following a strong quarterly report showcasing a 46% sequential increase in AI revenue and projected 60% year-over-year growth in that segment; management cited increased adoption of its Ethernet products, particularly for large language model training and inference, with overall revenue growth at 40.3%. Other analysts have also raised their price targets, citing Broadcom's upgraded AI outlook and potential revenue growth into 2026, while the company anticipates AI semiconductor revenue to grow by more than 60% year-over-year in the second half of fiscal year 2026.

Analysis

Broadcom Limited (NASDAQ:AVGO) has received a significant price target upgrade from Rosenblatt analysts to $340, up from $223, with a maintained Buy rating, reflecting strong momentum in its AI-related business. This follows Broadcom's recent quarterly report, which revealed a substantial 46% quarter-over-quarter increase in AI revenue, with the company projecting 60% year-over-year growth in this segment. Management attributes this surge to the adoption of its Ethernet products crucial for scaling up connectivity in large language model (LLM) applications, noting unit volumes are 5 to 10 times higher in scale-up versus scale-out deployments. The company's overall revenue growth stands at an impressive 40.3%, supported by a gross profit margin of 76.26%. Broadcom is currently ramping up production with three hyperscale customers and is in discussions with four additional XPU prospects, leveraging its strong custom ASIC capabilities. Despite these positive developments and an overall "GREAT" Financial Health Score from InvestingPro, the stock trades at a high P/E ratio of 116.5, leading InvestingPro to indicate it is currently overvalued. Multiple other analyst firms, including Citi (target $285), BofA Securities (target $300), JPMorgan (target $325), UBS (target $290), and Mizuho (target $310), have also raised their price targets, primarily citing bullish AI demand, an upgraded AI outlook, the launch of Tomahawk 6, and anticipated revenue growth into 2026. JPMorgan's rationale also included a favorable patent ruling. Broadcom's latest earnings presented mixed results, with strong AI segment performance (29% of Q2 2025 sales) but also faced challenges with lower margins. Nevertheless, guidance for the July quarter is slightly above consensus, with AI semiconductor revenue expected to grow by over 60% year-over-year in the second half of fiscal year 2026, underpinning sustained analyst optimism regarding its strategic AI opportunities.

Key Decisions for Investors

• Investors should acknowledge the significant AI-driven growth trajectory and robust analyst support for Broadcom, which may present further capital appreciation opportunities.
• Careful consideration of the stock's high P/E ratio of 116.5 and InvestingPro's overvaluation assessment is warranted, suggesting a cautious approach to entry points or position sizing despite strong fundamentals.
• Monitor Broadcom's ability to sustain AI revenue growth, manage margins effectively amidst rapid expansion, and successfully convert its XPU prospect pipeline into firm contracts as key indicators of continued performance.