CFRA, an independent research provider, has provided MT Newswires with the following research alert. Analysts at CFRA have summarized their opinion as follows:
We keep our 12-month target at $1,600 based on a P/E of 28.1x our CY 2025 EPS view, above historical to reflect our view of increasing AI opportunities and accelerating VMware growth/cost synergies. AVGO hosted its AI Infrastructure Investor Event yesterday, and we came away more bullish on the growth opportunities tied to AI and AVGO’s custom silicon and networking business. With regards to its custom silicon ASIC business (where Alphabet is its biggest client), AVGO highlighted a potential third customer that could ramp in the coming quarters. We see even more upside in its high-speed Ethernet business, where AVGO pointed out that it is poised to benefit from potentially 1M+ accelerator clusters entering the market, up from 30,000 currently. AI is set to comprise over 35% of semiconductor sales by the end of FY 2024, from 25% at the end of FY 2023, with networking set to be the biggest growth driver. We note that AVGO’s AI network/switcher and ASIC businesses are seen at a combined $10B in FY 2024 revenue.