What Wall Street Analysts Think of Broadcom's Stock Ahead of Earnings

As Broadcom Inc. (AVGO) prepares to report its fiscal fourth-quarter 2024 earnings on Dec. 12, Wall Street analysts have been weighing in on the semiconductor and infrastructure software giant's prospects. With a strong AI pipeline, market recovery, and VMWare synergy, many analysts remain bullish on Broadcom's stock.

Analysts' expectations for Broadcom's AI and semiconductor segments significantly influence their stock ratings. For instance, JP Morgan analyst Harlan Sur maintained an Overweight rating on Broadcom (AVGO) with a price target of $210. He cited strong demand for AI products, cyclical recovery in diversified semiconductor (ex-AI) end markets, and unlocked VMWare revenue synergy as key drivers for the company's growth.



Analysts' assessments of Broadcom's VMWare integration play a crucial role in their investment recommendations. According to Sur, the integration has unlocked revenue synergies, contributing to Broadcom's strong demand profile and earnings growth. He expects revenue, earnings, and free cash flow to exceed expectations, driven by AI pipeline, market recovery, and VMWare synergy.

Analysts' price targets and earnings estimates for Broadcom reflect a positive outlook on the company's growth potential. The average price target of $210.33, as of Dec. 10, 2024, indicates a 12.5% increase from the current stock price of $178.94. This optimism is supported by Broadcom's historical growth trends, with the stock returning 63% in 2024 and 2,140% over the last decade. Additionally, analysts expect EPS to grow by 18% year-over-year in the upcoming quarter, aligning with Broadcom's strong earnings growth trend.

Key factors driving analysts' optimism or pessimism regarding Broadcom's stock ahead of earnings include:

1. Strong AI pipeline and market recovery: Analysts anticipate that Broadcom's robust AI product demand and the cyclical recovery in its diversified semiconductor end markets will boost revenue and earnings.
2. VMWare synergy: The integration of VMWare is expected to significantly contribute to Broadcom's financial performance, unlocking revenue synergies.
3. AI production transition: While the transition from the TPU inference chip at 5 nm to the TPU v6 training chip at 3 nm may cause a temporary AI ASIC revenue pause in the first quarter, sequential growth is expected to resume in the second quarter, providing a strong tailwind for the remainder of fiscal 2025.

In conclusion, analysts' bullish outlook on Broadcom's stock ahead of earnings is driven by the company's strong AI pipeline, market recovery, and VMWare synergy. With a positive outlook on the company's growth potential, investors may consider Broadcom as an attractive investment opportunity. However, it is essential to monitor the company's earnings report and assess the potential impact of market dynamics on its stock performance.