While the chip market these days is looking less like a market and more like a piranha tank surrounded by clumsy cattle, chip stock Broadcom (AVGO) is making some headway. In fact, word from analysts at JPMorgan say that Broadcom is looking really good right now. Investors followed suit and bought in, sending shares up nearly 2% in Wednesday afternoon’s trading.
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JPMorgan analyst Harlan Sur—who has a five-star rating on TipRanks—kept his Overweight rating on the stock and also kept a $325 per share price target. That represents, reports noted, a roughly 20% upside against Broadcom’s closing price on Tuesday. Sur was quite impressed, following a meeting with Broadcom brass in which they showed off a rising demand for artificial intelligence. Granted, most of us likely already knew there would be brisk demand for artificial intelligence anything these days, but the confirmation is valuable too.
Plus, Broadcom execs noted that there were “gradual recovery trends” in the businesses not directly touched by the golden wand that is AI. This in turn led Sur to believe that Broadcom is, basically, in line for a “U-shaped recovery” as it is currently starting to “…fire on all cylinders.”
Brand New Ethernet Switch
Speaking of those non-AI businesses, Broadcom also recently rolled out a new Ethernet switch known as the Tomahawk 6. The Tomahawk 6 delivers some truly impressive connectivity capability, built around a three-nanometer node with an almost frightening 102.4 terabits per second of bandwidth. The Tomahawk 6 is actually geared for data center use, which makes its dizzying numbers make sense accordingly.
Reports note that the Tomahawk 6 actually doubles its predecessor’s bandwidth, and will “…address…the growing bottleneck in AI training workloads where networking speed and latency increasingly limit performance.” With 102.4 terabits involved, that is not even sort of a surprise.
What is the Price Target for Broadcom?
Turning to Wall Street, analysts have a Strong Buy consensus rating on AVGO stock based on 27 Buys and two Holds assigned in the past three months, as indicated by the graphic below. After a 55.79% rally in its share price over the past year, the average AVGO price target of $295.60 per share implies 6.39% upside potential.
