Broadcom's (AVGO) shares are trading higher Thursday after TD Cowen expressed enthusiasm for the company's AI potential. The firm upgraded its rating on Broadcom from Market Perform to Outperform, while simultaneously increasing its price target on the company from $1,400 to $1,500 per share.
Yahoo Finance's Julie Hyman and Josh Lipton break down the details.
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Editor's note: This article was written by Angel Smith
Video Transcript
JOSH LIPTON: Time now for Call of the Day. Broadcom shares, let's take a look there. They're jumping today after TD Cowen gave it an upgrade. So the back story here, Julie, is company host their AI event and analysts really seem to like what they heard there. Cowen raises their rating to outperform.
They say this reflects potential upside from both custom silicon and back-end AI networking. Price target goes to 1,500. They do note risk, by the way, for their clients. They're like, risk, what if data center spending slows, what if the capital return program doesn't, kind of, accelerate as expected. But that is, obviously, not their base case.
JULIE HYMAN: Yeah, and they give some specific reasons of what they liked from that event that you referred to, which was a sort of infrastructure event. They said now we know that there are more customers for their silicon-- their custom silicon business, which they said is a positive thing here. We knew about Google. TD Cowen's guessing that this is probably Meta is another customer here. So that's something that they like.
They also like the potential for greater than expected growth and synergies from their VMware acquisition, which they closed on. So those are just a couple of the reasons that they're liking the stock here. And by the way, liking the stock after a run, I mean I like that they put in the note better late than never because this is a stock that has already rallied. And I think 80%, including now TD Cowen, are positive. 80% of the analysts who cover it have buy equivalent ratings on the stock.
JOSH LIPTON: Yeah.
JULIE HYMAN: So they're coming a little late to the party, but you know, they're still there.
JOSH LIPTON: And it's been a party. The stock's already up about 25% this year. It's up about 120% over the past 12 months.
JULIE HYMAN: Wow!
