© Reuters. Broadcom’s (AVGO) AI tailwinds ought to offset semiconductor downturn – Citi
Citi analysts resumed protection of Broadcom (NASDAQ:) with a Purchase ranking and $1,100 value goal in a observe Monday, stating that AI tailwinds offset the semiconductor downturn.
Citi additionally famous the energy within the firm’s core enterprise, alongside accretion from the VMware acquisition, as different components that may push the inventory increased.
“F4Q23 revenue of $9.30 billion (up 5% QoQ) was above Consensus of $9.27 billion (up 4% QoQ) driven by strength in its networking business (27% of F23 sales),” defined Citi.
Relating to AI, Citi believes demand is offsetting the semiconductor downturn. The funding financial institution expects gross sales from AI infrastructure to double from $4 billion in FY23 to over $8 billion in FY24.
Moreover, Citi believes the acquisition of VMware might be greater than 30% accretive to AVGO’s FY25 EPS.
“AVGO expects the VMware business (14% of F24 sales) to grow at a double-digit CAGR. We believe VMware could be $12.50, or 34% accretive to AVGO’s F25 EPS,” added the funding financial institution. “We believe Broadcom should eventually achieve gross margins of 78% and operating margins of 58% for peak EPS of $60.00.”
