Broadcom’s dip following earnings presents buying opportunity, analysts say

“Guidance came in a bit lighter than expected, but management has been messaging lumpiness in AI revenue and growth is set to reaccelerate in 4Q,” said Jefferies analyst Blayne Curtis, in a note. “The cyclical correction in non-AI revenue is in-line with peers, and our view is the long-term trend in AI still favors an industry shift to custom ASICs, where AVGO remains well-positioned. Factor in the added benefit of the VMware acquisition running ahead of schedule on both revenue and earnings, and it’s easy to look past one minor bump in the road.”

Jefferies maintains its Buy rating and $205 price target.

Bank of America reiterated its Buy rating as well, and a slightly higher $215 price target.

“While inline trends and AI fatigue might keep stock volatile near-term, we would view any weakness as a particularly attractive buying opportunity,” BofA analysts Vivek Arya said in a note.

Citi Research reiterated its Buy rating as well due to upside from AI offerings and the VMware acquisition. It has a price target of $150 on the stock.

Meanwhile, Morgan Stanley maintained its Overweight rating and slightly increased its price target to $180 from $176.

“The business of custom ASICs for AI can be lumpy, and it was about flat in October, but AI sequential growth resumes from here amid a cyclical recovery in non-AI businesses,” said Morgan Stanley analyst Joseph Moore, in a note.

Mizuho reiterated its Outperform rating and $190 price target.

However, Seeking Alpha analyst Lighting Rock Research maintains a Sell rating on the stock due to concerns over legacy business declines and possible VMware integration issues.

“Broadcom’s termination of VMware’s perpetual license model and controversial pricing changes may drive partners to competitors, risking long-term growth,” they said.