Why Broadcom Stock Topped the Market on Tuesday

Key Points

• An analyst cranked his price target 17% higher that morning.

• He also maintained Broadcom's status as a top pick at his company.

• 10 stocks we like better than Broadcom ›

On a generally downbeat Tuesday for the stock market, chipmaker Broadcom (NASDAQ: AVGO) managed to eke out a gain. The company's share price crawled 0.3% higher, due in no small part to an analyst price target hike, against the 0.7% decline of the S&P 500 index that trading session.

Broadly bullish

Well before market open, prognosticator C.J. Muse of Cantor Fitzgerald made a double-digit raise to his Broadcom target. The new level is $350 per share, well up from the preceding $300. In making the change, Muse left his overweight (read: buy) recommendation unchanged. Not only that, he also maintained Broadcom as one of his company's top stock picks.

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Image source: Getty Images.

According to reports, the analyst believes that the company's custom silicon unit will power its growth in the short- to mid-term. Broadcom is a major supplier of custom chips for advanced functionalities, specifically artificial intelligence (AI).

Specifically, Muse pointed to the company's excellent opportunities to supply next-generation solutions to ambitious tech powerhouses Alphabet, the parent of Google, and Facebook/Instagram owner Meta Platforms. On top of that, the pundit also believes that the company's other division, infrastructure software, will bounce back in the very near future.

Double-digit improvements expected

Muse isn't the only professional Broadcom-watcher expecting higher performance from the company. On average, according to data compiled by Yahoo! Finance, analysts like him are expecting a more than 21% improvement in revenue (to nearly $63 billion) in the current fiscal year over the previous one. Better, they're modeling a 37% rise in per-share net income to $6.67.

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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet and Meta Platforms. The Motley Fool recommends Broadcom. The Motley Fool has a disclosure policy.