Citigroup and Melius Raise Target Prices: Is Broadcom’s AI Business on the Brink of Explosion?

TradingKey - U.S. East Coast time Tuesday, shares of Broadcom (AVGO.US), the U.S.-listed chipmaker, rose 3.27% to close at $256.85, hitting a new all-time high and surpassing its previous record of $251.88 set in December last year. Since April 3, Broadcom’s stock has surged more than 70%, as market confidence in the growth prospects of its AI business continues to rise.

[Broadcom Breaks December High Chart, Source: TradingView]

Citi analyst Christopher Danely raised his price target for Broadcom from $210 to $275 while maintaining a “Buy” rating, predicting that the company’s upcoming second-quarter financial report will outperform market expectations. He pointed out that strong demand for AI processors remains the key driver of continued revenue growth.

Although Broadcom’s non-AI semiconductor business has declined by about 40% from its peak in early fiscal 2023, Danely believes it is poised for recovery. Ben Reitzes, an analyst at Melius Research, also raised his price target on Broadcom to $283, noting that while the company lags behind NVIDIA in the AI chip market, its growth potential should not be overlooked.

According to FactSet data, over the past month, 16 analysts have reiterated their “Buy” ratings on Broadcom, signaling strong Wall Street confidence in its fundamentals and medium- to long-term outlook.

Market Expectations

Broadcom is scheduled to release its fiscal second-quarter results for the 2025 financial year after market close on Thursday, June 5. Against the backdrop of sustained strong AI demand, the market widely expects another record-breaking performance.

Analysts project that Broadcom’s Q2 revenue will reach approximately $15.02 billion, representing a 20% year-over-year increase. Adjusted net income is expected to total around $7.8 billion, up about 45% year-over-year. Earnings per share (EPS) are forecast at $1.57, reflecting a year-over-year increase of 42.73%.

Among these figures, AI-related revenue is projected to grow 42% year-over-year to $4.42 billion, serving as the core engine driving overall growth. Additionally, semiconductor segment revenue is expected to rise 17% to $8.4 billion, while infrastructure software revenue is forecast to jump 23% to $6.5 billion, primarily driven by VMware integration and the shift toward subscription-based models.