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On Wednesday, Citi maintained its Buy rating on Broadcom Limited (NASDAQ:) with a steady price target of $1,560.00. The firm’s confidence stems from a recent investor meeting with Broadcom CEO Hock Tan, during which he conveyed a strong outlook for artificial intelligence spending. According to Tan, the demand for AI accelerators and networking products continues to grow robustly.
Broadcom is optimistic about reaching the $400 billion total addressable market (TAM) for AI, as stated by the CEO. The company also anticipates that the expansion of custom application-specific integrated circuits (ASICs) will be more enduring than that of graphics processing units (GPUs). This perspective supports Citi’s positive stance on Broadcom’s stock prospects.
The anticipated acquisition of VMware (NYSE:) is another key factor in Citi’s evaluation, projected to account for 23% of Broadcom’s fiscal year 2024 sales. This merger is expected to contribute significantly to the company’s revenue stream and is seen as a potential driver for stock performance.
Citi’s reiteration of the $1,560 price target reflects a recognition of these growth opportunities. The firm believes that Broadcom could see benefits from both its AI-related endeavors and the strategic acquisition of VMware, which could lead to an increase in the company’s stock value.
Broadcom’s current positioning in the market, coupled with the expected influence from AI spending and the VMware acquisition, underpins Citi’s continued recommendation to buy AVGO shares. The firm’s analysis suggests a stable outlook for Broadcom’s financial future and stock performance.
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