This article first appeared on GuruFocus.
Oppenheimer turned upbeat on Broadcom (NASDAQ:AVGO) ahead of its June 3 earnings report. Analyst Rick Schafer reiterated a Buy rating and a $450 price target, saying the company looks likely to post a second-quarter beat and then raise its July-quarter outlook, with AI demand doing most of the heavy lifting.
The firm’s view rests on Broadcom’s custom AI chip business and networking products. Oppenheimer said Broadcom is benefiting from hyperscaler spending by large customers such as Alphabet and Meta, which design chips tailored to their own AI systems and are unlikely to switch vendors easily. That gives Broadcom a sticky, long-term revenue base.
Schafer also pointed to Broadcom’s first-quarter strength as proof of momentum. Revenue reached $19.31 billion, up 29% year over year, and management guided for $10.7 billion in AI chip revenue in the second quarter. Oppenheimer thinks that AI figure could come in higher, with growth carrying into the back half of the year.
The analyst call comes despite a rich valuation. Broadcom trades at a premium multiple, so Oppenheimer is essentially betting that execution stays strong enough to justify the stock’s AI-driven run.
