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Stocks in the semiconductor industry cannot seem to catch a break from President Donald Trump’s tariff escalations, especially against China. In one of its latest moves, the Trump administration has now imposed restrictions on sales of certain artificial intelligence (AI) chips to China.
The fallout has been immediate, with shares of prominent semiconductor companies like Nvidia (NVDA), Advanced Micro Devices (AMD), and Micron (MU) declining considerably over the past week. Overall, the VanEck Semiconductor ETF (SMH), which is the largest exchange-traded fund (ETF) dedicated to the sector, is down 22.5% on a YTD basis, more than the Nasdaq Composite Index ($NASX) and S&P 500 Index’s ($SPX) falls of 17.8% and 12.3%, respectively.
However, analysts believe that the long-term AI growth story continues to hold. A leading name from the industry, whose stock has also corrected amid wider market concerns, can be looked upon as a viable bet to benefit from the megatrend.
About Broadcom Stock
Founded in 1991, Broadcom (AVGO) is a prominent American technology company specializing in semiconductor and infrastructure software solutions. In the semiconductor segment, the company designs and supplies chips for networking, broadband, wireless, storage, and industrial applications, while the infrastructure software solutions segment provides software solutions for data centers, cybersecurity, and enterprise operations. The company’s market cap stands at a sizeable $804 billion.
AVGO stock is down 28.3% on a YTD basis.
So, what could be possible reasons for analysts’ bullishness around Broadcom? Let’s try and find out.
Solid Fundamentals Marked By Consistent Growth
Broadcom has been a steady performer, with growth a standout feature. The last 10 years have seen the company reporting revenue and earnings compound annual growth rates (CAGRs) of 26.5% and 35.11%, respectively.
The company’s strong showing continued in the most recent quarter with both revenue and earnings coming in ahead of estimates. Revenues surged by 25% from the previous year to $14.92 billion, while earnings went up at an even sharper tick of 45.4% to $1.60 per share to exceed the Street expectations of $1.51 per share. Notably, this marked the 16th straight quarter of earnings beats from the company.
The rise in revenue and earnings was accompanied by an increase in net cash flow from operating activities and free cash flow as well at $6.1 billion (+27% YOY) and $6 billion (+28.1% YOY), respectively. Overall, Broadcom’s cash balance at the end of the quarter stood at $9.3 billion, which was above its short-term debt levels of $5.7 billion.
In terms of outlook, the company has guided for revenues of $14.9 billion in Q2 2025 which would represent a growth of 19.2% from the year-ago period.
Meanwhile, analysts are forecasting industry-beating growth for Broadcom with forward revenue and earnings growth pegged at 26.62% and 20.33% compared to the sector medians of 6.68% and 10.28%.
Encouraging Tailwinds
Aside from its robust fundamentals, Broadcom’s strategic collaborations and innovations in AI infrastructure act as an enhancer for its market position. Underpinned by its strong revenue growth from AI, management expects the AI-focused revenue growth momentum to sustain, with forecasts of AI revenue to be $4.4 billion in the second quarter of its fiscal 2025. This would represent a 44% increase year-over-year.
Moreover, we consistently see new product rollouts from Broadcom.
This year, Broadcom introduced the Brocade G710 switch, positioning it as the industry’s most efficient and lowest-latency SAN switch tailored for rack-scale infrastructure environments. In parallel, the company has pushed forward with innovations in optical connectivity technologies to bolster AI infrastructure capabilities. Among these developments is a landmark achievement — the industry’s first public demonstration of PCIe Gen6 optical connectivity for AI scale-up networks, built upon Broadcom’s established technology platforms. These initiatives are pivotal as they target the growing need for higher data throughput, minimized latency, and better energy efficiency in an increasingly AI-centric landscape.
Broadcom has also deepened its strategic alliances to strengthen its global presence. Notably, it has partnered with Audi to accelerate the digitization of factory operations. This collaboration, which also involves major technology leaders like Cisco (CSCO) and Siemens (SIEGY), focuses on integrating Broadcom’s VMware Cloud Foundation to unify management of industrial computing systems on the production floor. Such partnerships not only enhance Broadcom’s reputation as a reliable enterprise technology provider, but also support its international expansion efforts.
Adding further momentum, Broadcom is positioned to benefit from favorable macroeconomic conditions shaping the semiconductor landscape. The global semiconductor industry reached approximately $627 billion in 2024 and is forecast to approach $700 billion by 2025, fueled largely by rising demand in AI and cloud computing segments. Broadcom’s offerings — including high-throughput networking solutions and tailor-made application-specific integrated circuits — align closely with these growth trends, reinforcing its relevance in an increasingly digital economy.
Analyst Opinions on AVGO Stock
Overall, analysts have attributed a rating of “Strong Buy” for the stock with a mean target price of $244.96 which denotes upside potential of about 47% from current levels. Out of 31 analysts covering the stock, 28 have a “Strong Buy” rating and three have a “Hold” rating.
