Morgan Stanley raises price target for Broadcom stock amid strong AI chip demand
Morgan Stanley analyst Joseph Moore raised his price target for Broadcom (AVGO) from $502 to $505, maintaining an Overweight rating. The adjustment follows the company's fiscal third-quarter results and positive guidance for Q4 revenue of $34.8 billion—exceeding Wall Street estimates. AI semiconductor sales surged 221% year-over-year during the quarter, driven by demand from major clients like Google, Anthropic, OpenAI, and Meta. Broadcom's CEO Hock Tan expressed confidence in continued growth, with a projected $115 billion in AI revenue for fiscal 2027. The firm’s strong performance—86% year-over-year revenue increase to $29.6 billion and operating income up 92%—has reinforced investor optimism. Morgan Stanley noted that despite the stock's recent gains, it remains undervalued compared to peers in the AI chip sector. The bank outlined a risk-reward framework with base-case, bull-case, and bear-case price targets of $505, $640, and $300 respectively. The firm cited strong operating leverage as offsetting potential margin pressures from rising memory costs.
Topics: AI chips earnings results Morgan Stanley stock price target