Top Analysts Stay Bullish on Broadcom Stock (AVGO) Despite Post-Q2 Earnings Decline
Semiconductor company Broadcom (AVGO) reported a modest earnings beat for the second quarter of Fiscal 2025, driven by artificial intelligence (AI)-led demand for its offerings. However, AVGO stock was down more than 4% in Friday's pre-market trading (as of writing), as investors seemed to have lofty expectations from the maker of application-specific integrated circuits, or ASICs.
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Analysts React to Broadcom's Q2 FY25 Earnings
Following the Q2 print, Baird analyst Tristan Gerra highlighted Broadcom's continued strong execution and solid fundamentals. While the 4-star analyst acknowledges that Broadcom is well-positioned to remain the leader in custom AI ASIC solutions, he argues that GPUs (graphics processing units) will continue to play a primary role, including in AI inferencing. He added that Broadcom's AI XPU revenue in 2026 could be mainly driven by new customers, while the Tomahawk 6 offering is expected to drive robust AI networking top-line growth in the first half of FY26.
Gerra reaffirmed a Buy rating on AVGO stock but maintained the price target at $210, noting that the stock's valuation is rich, mainly compared to Nvidia (NVDA). He believes that Broadcom stock is trading at an elevated valuation, given his expectation of a 'potential 1H26 slowdown in XPU QoQ revenue comps before new customer ramps take place.'
Meanwhile, Mizuho analyst Vijay Rakesh reiterated a Buy rating on Broadcom stock and increased the price target to $310 from $300, noting the company's industry-leading FY25 gross margin and operating margin estimates at about 79% and 65%, respectively, and expectation of free cash flow (FCF)/year growing to about $31 billion. The 5-star analyst pointed out the accelerating AI inference demand and projects Broadcom's AI revenue to grow to about $19 billion in FY25 and nearly $32 billion in FY26.
Likewise, Deutsche Bank analyst Ross Seymore boosted the price target for Broadcom stock to $270 from $205 and reiterated a Buy rating. The 5-star analyst noted that the company's results and guidance were essentially in line with expectations, with the AI business delivering upside, the software business remaining steady, and the non-AI semiconductor business witnessing a slower recovery. Seymore contends that while the dearth of a cyclical recovery in the non-AI business could continue to be a headwind into Q4 FY25, he expects investors to 'more eagerly focus' on the rise in Broadcom's AI business.
Is AVGO Stock a Buy, Hold, or Sell?
Wall Street has a Strong Buy consensus rating on Broadcom stock based on 27 Buys and two Holds. The average AVGO stock price target of $260.39 indicates that the stock is fully valued at current levels.
These ratings and price targets could see further revisions, as more analysts are expected to react to Broadcom's results and outlook.
See more AVGO analyst ratings
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