Goldman Sachs initiated coverage of seven companies in the U.S. digital semiconductor and electronic design automation (EDA) software sector. The investment bank assigned a Buy rating to Broadcom (AVGO) stock, as it believes that the company will leverage its dominant position in enterprise networking silicon to deliver a strong market share in custom artificial intelligence (AI) chips for hyperscalers. However, Goldman Sachs assigned a Hold rating to Marvell Technology (MRVL) stock, saying that while recovery in the traditional franchise continues, it sees moderate visibility in the AI ramp into 2026.
Don’t Miss TipRanks’ Half-Year Sale
- Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence.
- Make smarter investment decisions with TipRanks' Smart Investor Picks, delivered to your inbox every week.
Aside from AVGO, Goldman Sachs initiated coverage of Nvidia (NVDA), Cadence (CDNS), and Synopsys (SNPS) stocks with a Buy rating. Meanwhile, it assigned a Hold rating to Advanced Micro Devices (AMD) and ARM Holdings (ARM).
The investment bank said that it is most constructive on merchant and select custom silicon and EDA vendors that are “tied to the most sustainable elements of AI-related capital expenditure.”
Goldman Sachs Is Bullish on AVGO Stock
Goldman Sachs analyst James Schneider assigned a Buy rating to AVGO stock with a price target of $315. The 4-star analyst expects Broadcom to capitalize on its leadership in the enterprise networking silicon market to capture a higher market share in custom AI chips for hyperscalers. Interestingly, AI is estimated to account for more than 40% of AVGO’s revenue by 2026. Schneider noted that AVGO’s differentiated communications technology is helping it establish a dominant position. The analyst believes that AVGO has emerged as the second “indispensable” AI supplier for U.S. hyperscalers.
Schneider highlighted that Broadcom also continues to generate increasing profitability in its core infrastructure software business. Additionally, he noted that the company’s diverse portfolio of infrastructure software assets gives it a competitive edge over its rivals.
Furthermore, the analyst contends that AVGO stock deserves a premium valuation, given the “visibility provided by sole-sourcing at silicon accounts and the mission-critical nature of its software portfolio.” Schneider’s price target indicates a 35x P/E (price-to-earnings) multiple for AVGO stock, backed by business visibility and a high-margin product portfolio.
What Is the Price Target for AVGO Stock?
Overall, Wall Street has a Strong Buy consensus rating on Broadcom stock, based on 28 Buys versus two Hold recommendations. The average AVGO stock price target of $298.04 indicates 7.3% upside potential from current levels. Broadcom stock has risen about 20% year-to-date.
Why Is Goldman Sachs Sidelined on MRVL Stock?
Goldman Sachs initiated coverage of Marvell Technology stock with a Hold rating and a price target of $75. Schneider highlighted that the networking solutions provider has a market-leading position in optical digital signal processors (DSPs).
Schneider believes that Marvell has made notable progress in boosting its AI custom compute business, particularly at Amazon (AMZN) with its Trainium platform. While he acknowledges that the company has captured at least a portion of the next-generation product opportunity, he is cautious due to the lack of exclusivity, which makes this revenue stream less predictable.
The analyst noted that the recovery in Marvell’s high-margin traditional businesses is offset by moderate visibility in its AI custom compute ramp. Schneider explained that his price target is based on a P/E of 25x, which is at the lower end of MRVL stock’s historical range due to the uncertainty in the AI custom compute revenue trajectory.
What Is the Forecast for MRVL Stock?
While Goldman Sachs has a neutral stance, Wall Street has a Strong Buy consensus rating on Marvell Technology stock based on 28 Buys and four Holds. The average MRVL stock price target of $91.10 indicates 26.1% upside potential from current levels.
