The stock price of Broadcom (NASDAQ: AVGO), the semiconductor and infrastructure software giant, recorded significant gains in 2023, rising by 100%, and it remains at the center of attention as investors ponder if it can replicate this movement in 2024.
As 2024 progresses, AVGO has faced short-term headwinds aligning with the general stock market, with the equity trading at $1,204.88 as of the last recorded price. Although the stock closed with a drop of about 2% on Friday, January 26, AVGO has recorded impressive year-to-date gains of almost 12%.
Indeed, AVGO investors will be hoping the stock continues to build momentum by capitalizing on key business fundamentals, mainly driven by artificial intelligence (AI) innovations.
Picks for you
Notably, the company’s strength lies in its semiconductor design, networking technologies, and software solutions. Leveraging this expertise, the company integrates AI capabilities into its diverse products and services.
Considering the potential of semiconductors and AI, a general anticipation would be to see Broadcom emulate industry leaders such as Nvidia.
In the fiscal year 2023, Broadcom achieved a record-breaking revenue of $35.8 billion, marking an 8% year-over-year growth. This impressive performance can be attributed to strategic investments in accelerators and network connectivity tailored for AI applications.
Wall Street analysts set AVGO stock
However, when looking at AVGO stock price forecasts, Wall Street analysts at TipRanks see little movement over the next 12 months. Based on data compiled from 20 analysts offering 12-month price targets, the average estimate is $1,191.18 per share. This figure represents a -1.14% change from the current price of $1,204.88, suggesting a potentially stagnant year for Broadcom’s stock.
However, analyst opinions vary considerably. The most optimistic forecast predicts a rise to $1,400, while the most bearish expects a dip to $1,000. The analyst consensus rating for Broadcom currently stands at “Strong Buy,” with 18 Buy ratings, 2 Hold ratings and no Sell ratings.
Broadcom’s fundamentals
Broadcom has enjoyed a successful run in recent years, benefiting from the surging demand for semiconductors and data center infrastructure solutions. Investors are banking on this background in anticipation of a possible stock rally.
The company has made several strategic moves in the recent past that would likely propel it to maintain 2023’s gains potentially. For instance, Broadcom collaborated with Google Cloud, a subsidiary of Alphabet (NASDAQ: GOOGL), leveraging generative AI tools to enhance cybersecurity measures and boost business operational efficiency.
Last year, the company also concluded the acquisition of VMware, a cloud software company, overcoming various regulatory challenges. Valued at $61 billion in a cash-and-stock transaction,
the acquisition is part of Broadcom’s strategic move to diversify its business portfolio from semiconductors to the cloud.
Additionally, Broadcom’s commitment to developing AI-centric chips and hardware accelerators positions it to empower diverse industries such as healthcare, automotive, telecommunications, and beyond.
However, Broadcom is expected to face several challenges, particularly with potential impacts from macroeconomic factors such as inflation. Despite the demand for semiconductors in AI-related industries, Broadcom also remains susceptible to overall market sentiments.
Conclusion
Despite analysts predicting a downside for Broadcom stock, the equity has shown promise for further growth, surging over 10% in 2024 despite broader short-term market volatility. The sustained demand in the chip sector and potential advantages from the VMware acquisition provide significant growth catalysts for Broadcom.
Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
