Goldman Sachs said investors should not stop investing in Broadcom following the company’s latest earnings report. Analyst Toshiya Hari reiterated a buy recommendation on the semiconductor and infrastructure software supplier on Friday. Hari’s $190 price target suggests the stock could rise 24% from Thursday’s closing price. Hari’s announcement came a day after Broadcom reported third-quarter earnings that beat analysts’ expectations on both revenue and profit. But Broadcom said it expected revenue of about $14 billion for the current quarter, slightly below the consensus estimate of $14.11 billion, based on analysts’ expectations surveyed by FactSet. Goldman analysts also noted that revenue from Broadcom’s semiconductor solutions business fell short of analysts’ expectations in the third quarter. But Hari said the challenges related to artificial intelligence-related revenue should be viewed simply as a “short-term, temporary issue.” “After a stumble this quarter, in the near term, we expect a re-acceleration in the AI semiconductor business and a cyclical recovery in non-AI revenue streams, which will see the company regain its strong performance and growth pace,” Hari told clients in a report. Despite the weak forward guidance and AI-related performance, Hari said Goldman remains confident in its long-term investment thesis, citing Broadcom’s competitive position in its high-speed network and custom computing businesses, its “industry-leading” profile of margins and returns, and its focus on consistent free cash flow generation and returning capital to shareholders. Still, shares fell more than 9% at the start of trading on Friday as investors scrutinized the earnings report. This marks a turnaround from a strong year for Broadcom, which has seen it soar nearly 37% in 2024. AVGO YTD Mountain Broadcom, Year to Date
Goldman says Broadcom’s gains are temporary and should be bought low
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