Key Takeaways
- Bernstein’s Stacy Rasgon assigns Broadcom an “outperform” rating, describing the current valuation as “absurdly attractive”
- Analyst reports indicate AI demand “shows no signs of slowing”
- Recent quarterly performance delivered 16% revenue growth and 173% profit surge
- Rasgon projects earnings per share exceeding $20 by fiscal 2027, compared to $5.12 trailing twelve months
- Cantor Fitzgerald holds Overweight rating with $525 target; Rosenblatt establishes $500 price objective
Shares of Broadcom (AVGO) climbed 4.7% during Monday’s trading session following a positive research note from Bernstein analyst Stacy Rasgon, who highlighted the chipmaker’s position in AI infrastructure and named it among his preferred investments.
Rasgon assigned an “outperform” rating to Broadcom and disclosed that Bernstein maintains a position in the stock within its proprietary portfolio. The analyst issued an identical recommendation for Nvidia (NVDA), which gained 1.65% during the same session.
The timing of this upgrade is particularly noteworthy. After reaching a peak of $413 per share on December 10, Broadcom shares had retreated approximately 22% amid broader market skepticism surrounding artificial intelligence investments.
Rasgon challenged this negative sentiment directly. “AI demand currently shows no signs of slowing,” he noted, referencing Broadcom’s latest quarterly performance as evidence. The semiconductor giant reported revenue growth of 16% alongside a dramatic 173% increase in profitability.
With AVGO shares hovering near $321, Rasgon characterizes the current pricing as a compelling entry point. His fiscal 2027 forecast calls for earnings per share reaching $20 or higher, which would translate to approximately 16 times forward earnings based on today’s stock price.
Breaking Down The Numbers
That forward earnings multiple becomes particularly significant when considering Broadcom‘s recent trajectory. Over the trailing twelve-month period, the company generated $5.12 in earnings per share. Achieving the $20 target by 2027 would represent nearly 400% earnings expansion over two years — essentially doubling annually.
Using trailing earnings metrics, the stock currently trades around 60 times earnings. Rasgon’s thesis is direct: if management delivers on projected growth rates, today’s 60x multiple will appear remarkably inexpensive in retrospect.
Other investment firms are expressing comparable optimism. On March 5, Cantor Fitzgerald reaffirmed its Overweight stance with a $525 price objective following Broadcom’s first-quarter fiscal 2026 results.
Cantor highlighted management commentary indicating networking infrastructure could represent as much as 40% of total AI-related revenue. The firm subsequently increased its earnings estimates, now viewing $23–$25 per share as realistic for 2027, up from its earlier $20 projection.
Wall Street Price Targets Align
Rosenblatt Securities also released updated guidance on March 5, raising its price target to $500 while maintaining a Buy recommendation. The firm referenced CEO Hock Tan’s remarks that fiscal 2027 visibility has “significantly improved.”
Both investment firms emphasized the $100 billion AI chip revenue threshold as a critical benchmark. Cantor believes Broadcom can exceed that milestone in fiscal 2027, which forms the foundation for both firms’ constructive outlooks.
Cantor included Broadcom alongside Nvidia in its list of top recommendations, strengthening the argument that semiconductor demand for AI applications continues despite recent stock price volatility.
Broadcom generates revenue through two primary divisions: Semiconductor Solutions and Infrastructure Software.
As of the close of trading, AVGO shares stood at $321.15, representing a gain of $11.29 for the session, with the company’s market capitalization approximately $1.5 trillion.
