Broadcom ( AVGO ) stock extended gains on Thursday after the semiconductor company said its artificial intelligence (AI) sales more than doubled in Q1, with AI revenue expected to reach $100 billion by 2027. Many times.
Despite today’s rally, Broadcom stock remains down about 5% from its year-to-date high.
Broadcom’s market-beating quarter and impressive guidance have Goldman Sachs senior analyst Jim Schneider maintaining a “buy” rating on the chip giant. According to Schneider, the earnings report confirms demand for AVGO’s custom AI accelerator (XPU) and the network remains in hyperdrive.
Broadcom has fully secured component capacity through 2028, which Schneider believes will push AVGO stock to $450 by the end of the year, indicating an impressive potential upside of 36% from here.
A dividend yield of 0.79% makes the Nasdaq-listed company even more attractive as a long-term hold.
Goldman Sachs also recommends buying Broadcom shares because the VMware merger has created a stable cash flow engine that enables the titan to aggressively reinvest in its AI roadmap.
On Thursday, the company authorized an additional $10 billion in share repurchase programs through 2026, indicating more confidence in AVGO’s ability to grow year-over-year.
While technical breakouts suggest that AI stocks are now broadly bullish, the 14-day Relative Strength Index (RSI)’s upward movement at around 50 signals is still not out of juice.
Finally, Broadcom is reaping the benefits of a global infrastructure refresh as enterprise data centers transition to the PCIe Gen6 and Tomahawk 5 networking standards.
This cyclical recovery in non-AI high-performance computing (HPC), combined with the dominant influence in the custom ASIC market for hyperscalers, such as Alphabet ( GOOG ) ( GOOGL ) Google and Meta ( META ), provides a diverse margin cushion that few can match.
Other Wall Street firms also agree with Goldman Sachs’ positive outlook on Broadcom.
