The artificial intelligence-fueled arms race is only just beginning, and UBS views Broadcom as well positioned to come out a winner. Analyst Timothy Arcuri reiterated his buy rating and $925 price target on shares after the company’s fiscal third-quarter results, calling the semiconductor a “prime beneficiary” of the AI fight. AVGO 1D mountain Broadcom shares fall post-earnings “The AI narrative for AVGO remains firmly intact with both its custom [application-specific integrated circuits] and networking businesses seeing a rapid ramp in AI-related revenues, more than offsetting headwinds in the traditional (non-AI) semis business,” he said. Broadcom shares have surged 65% this year as investors go all in on AI. Shares fell 3% on Friday as the chipmaker offered guidance for the current quarter roughly in line with estimates. Despite the downward move, Broadcom reported stronger-than-expected third-quarter results. Looking ahead, Arcuri expects ongoing AI revenue growth into the 2024 fiscal year to help Broadcom move past persisting end market weakness and a difficult demand environment. AI revenue is expected to surpass 25% of semis revenue in the coming year. Bank of America’s Vivek Arya also noted that upside from AI should diminish headwinds from a weak enterprise market, adding that command over operating expenditures should support profitability. With the exception of Nvidia, Arya called Broadcom one of the biggest AI beneficiaries within Bank of America’s coverage, expecting the company to retain its lead Ethernet networking position as AI demand grows. Arcuri’s $925 price target implies about 5% upside from Thursday’s close. Arya, meanwhile, has a target of $1,050 — indicating a potential gain of 13%. — CNBC’s Michael Bloom contributed reporting
