Why we’re raising our price target on Broadcom despite its post-earnings sell-off Broadcom announced strong quarterly results with significant year-over-year revenue and adjusted EPS growth, driven by its AI semiconductor business. However, the stock experienced an after-market sell-off because the guidance did not significantly exceed expectations, despite continued strong momentum in AI revenue. Analysts are raising their price targets, citing the long-term potential of Broadcom’s AI business and its conservative forecasts.

• Broadcom’s fiscal second-quarter revenue was $22.19 billion, a slight miss against the consensus forecast, but revenue rose 48% annually.
• Adjusted EPS increased 54% to $2.44, beating expectations, and adjusted EBITDA grew 52% to $15.24 billion.
• The company’s AI semiconductor revenue surged 143% year over year to $10.8 billion, with strong growth expected to continue.
• Despite positive results, shares fell in after-market trading as investors sought stronger AI revenue upside in the guidance.
• Broadcom expects AI semiconductor revenues of $16 billion in the third fiscal quarter, with year-over-year growth exceeding 200%.
• Analysts are raising their price targets due to confidence in the long-term AI business growth, despite a recent stock rally.
• New deals with Google, Anthropic, OpenAI, and Meta Platforms are expected to drive future AI semiconductor revenue.
• A special purpose vehicle with Apollo and Blackstone is being created to facilitate Broadcom’s chip sales to AI customers.
• The Infrastructure Software segment missed revenue expectations for the second consecutive quarter.