Analysts reboot Broadcom stock price target after earnings, bond sale

Dr. Seuss said that simplest that you just may keep watch over the future, but the people at Broadcom (AVGO) sure would desire to aid.

The semiconductor company said on Oct. 7 that it used to be launching what it describes as the industry’s first merchant silicon 50G passive optical line terminal-optical network unit devices.

Related: Analysts revisit Broadcom stock price targets after Q3 earnings

Yeah, it truly is a mouthful, but Broadcom explains that the devices are "designed to accelerate man made intelligence and machine learning ... and enable telecom operators to drive new applications on 50G fiber broadband networks."

Broadcom said that "50G PON stands as the following standards-based technology [that] has the whole elemental elements needed to future-proof existing GPON and XGS-PON networks."

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The Palo Alto, Calif., company said it planned to highlight its advancements in man made intelligence on the 2024 Open Compute Project OCP Global Summit. The convention, scheduled for Oct. 15 to 17, is billed as “the premier event uniting the foremost forward-thinking minds in open IT Ecosystem development.”

Broadcom exec: 'AI at an inflection point'

“AI is at an inflection point in our industry so that they could change our lives and the way we work,” Charlie Kawwas, president of Broadcom’s semiconductor solutions group, said in a statement.

“At Broadcom, we are ... pioneering breakthroughs in networking and connectivity to enable open, scalable and power efficient AI infrastructure," he added.

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Broadcom has seen a surge in demand for its really expert networking chips, which play a key role inside of the event of AI systems.

The corporate also makes ASIC chips, which assist hyperscalers — the massive providers of cloud services and infrastructure — like Amazon and Alphabet's Google — move large amounts of information through integrated circuits and sooner or later accelerate the speed and reliability with which they process information.

Broadcom shares are up nearly 60% year-to-date and have more  than doubled (up 111%) from a year ago.

Last month, Broadcom beat Wall Boulevard’s expectations for third-quarter earnings and revenue, but the stock slumped after the corporate issued a muted near-term revenue forecast.

Hock Tan, president and CEO, told analysts that “AI revenue continues to grow and grow strongly.”

Last year, Broadcom completed its $Sixty a thousand million acquisition of cloud software company VMware. Tan said that "the transformation of the business model of VMware continues to progress very well."

"We booked more than 15 million [central processing unit] cores of VCF, representing over 80% of the whole VMware products we booked one day of the quarter," he said. "And this translates into an annualized booking value of $2.5 billion one day of Q3, up 32% from the preceding quarter."

Meanwhile, Tan added, "we continue to drive down costs in VMware. We brought VMware spending the whole way down to $1.three million in Q3 from $1.6 million in Q2."

Asked about additional acquisitions, Tan said that "presently, I am having my hands in point of fact full and enjoying myself doing it, on in point of fact turning, transforming the business model of VMware."

"I am very keen on getting VMware because it continues to accelerate in getting deepest cloud deployed inside of the largest enterprises inside of the arena," he said.. "And what, it should per chance well be the opposite year, two years to go to make that transformation totally complete."

TheStreet Pro's Chris Versace used to be impressed with Broadcom's results and added the corporate to his bullpen on Sept. 6.

Analyst says 'Broadcom is a favourite in AI'

"Certainly one of our methods is to pay close attention to competitors, customers, and suppliers for our holdings and given its end-market mix, and Broadcom indubitably falls into that basket.," he said.

Versace said that "the now now not-so-good news is that like other companies we’ve seen report in recent weeks, Broadcom’s revenue guidance of $14 billion for the current quarter came up wanting the $14.11 billion consensus."

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"In our view, seeing a stock trade off challenging on such a tiny shortfall is a symptom of the market we’re in," he said.

Analysts have been updating their price targets for Broadcom recently.

Cantor Fitzgerald declared that "Broadcom is a favourite in AI." The investment firm raised its price target on Broadcom to $225 from $200 while affirming an overweight rating on the shares into Q3 earnings season, in accordance with The Fly

Truist raised the firm's price target on Broadcom to $205 from $204 while affirming a buy rating on the shares.

The firm said that it used to be updating its model with reduced interest expense after the corporate issued $5 billion of bonds with maturities starting from 2028 to 2034 and coupons starting from four.15% to four.eight%, the firm said.

On Oct. 2, Broadcom said it had issued those senior notes. The proceeds will go to general purposes, including paying down existing debt.

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