Apollo economist warns: AI bubble now bigger than 1990s tech mania
On Tuesday, JPMorgan analysts reiterated an Overweight rating and maintained a $250.00 price target for Broadcom Limited (NASDAQ:AVGO), which currently trades near its 52-week high. According to InvestingPro data, the company has received a "GREAT" financial health score, though current analysis suggests the stock is trading above its Fair Value.
Broadcom’s demand profile for its artificial intelligence products, including custom ASICs and networking solutions, remains robust. The analysts also noted stabilization in Broadcom’s non-AI semiconductor business, which includes sectors like enterprise, server/storage, broadband, and wireless. With impressive gross profit margins of 76.26% and revenue growth of 40.3% over the last twelve months, the company has demonstrated strong operational execution. Additionally, they highlighted ongoing revenue synergy from VMware as a positive factor.
The forecast for Broadcom’s April quarter revenue, earnings, and free cash flow is expected to meet or slightly exceed both JPMorgan’s and consensus expectations. The analysts predict a 5-7% quarter-over-quarter revenue growth for the upcoming July quarter, driven by strong AI demand. Their revenue estimate for the July quarter stands at $16.1 billion, which is above the consensus estimate. InvestingPro subscribers can access 20+ additional key insights about Broadcom, including detailed valuation metrics and growth indicators in the comprehensive Pro Research Report.
Broadcom’s AI-related revenues are estimated to exceed $5 billion, surpassing the consensus estimate of $4.8 billion. This growth is attributed to the increasing demand for AI solutions, which is expected to contribute significantly to the company’s financial performance. With a market capitalization of $1.19 trillion and analyst consensus remaining strongly bullish, Broadcom continues to strengthen its position as a prominent player in the semiconductor industry.
In other recent news, Broadcom has made headlines with the release of its Tomahawk 6 switch series, achieving a remarkable 102.4 terabits per second of switching capacity on a single chip. This advancement is designed to support large-scale AI clusters, highlighting Broadcom’s focus on AI infrastructure. Additionally, several analyst firms have shown confidence in Broadcom’s prospects. Citi has raised its price target to $276, citing strong performance in the AI segment, which is expected to account for 30% of fiscal 2025 sales. Melius has maintained its Buy rating with a price target of $283, emphasizing Broadcom’s strength in the networking division. Redburn-Atlantic has initiated coverage with a Buy rating and a $301 price target, highlighting Broadcom’s strategic acquisition of VMware. Mizuho Securities has also increased its price target to $300, maintaining an Outperform rating and noting Broadcom’s growth potential in AI Custom Silicon. These developments reflect Broadcom’s significant position in the technology sector, particularly in AI and networking.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.