Goldman says Broadcom earnings are just a minor blip and should be bought on the dip
Goldman Sachs said investors shouldn’t pull the plug on Broadcom after the company’s latest earnings report. Analyst Toshiya Hari reiterated his buy rating on the semiconductor and infrastructure software provider on Friday. Hari’s $190 price target implies the stock could rise 24% from Thursday’s close. Hari’s call comes a day after Broadcom reported fiscal third-quarter earnings that beat analysts’ estimates on both revenue and earnings. But Broadcom also said revenue for the current quarter would come in at about $14 billion, slightly below the consensus estimate of $14.11 billion, based on analysts polled by FactSet. The Goldman analyst also noted that revenue from Broadcom’s semiconductor solutions business fell short of analysts’ expectations in the third quarter. However, Hari said the AI-related revenue challenges should be viewed as a “short-term blip.” “In the short term, following this quarter’s bump, we envision a reacceleration in the AI Semiconductor business, coupled with a cyclical recovery in the non-AI revenue stream … getting the company back on track and up to speed,” Hari told clients in a note. Despite the forward guidance and lackluster AI-related performance, Hari said Goldman remains confident in its long-term investment thesis for the following reasons: Broadcom’s competitive position in high-speed networking and custom computing “Industry-leading” track record of margins and profits Stable free cash flow generation and focus on returning capital to shareholders. However, the stock fell more than 9% in early trading Friday as investors digested the earnings report. That marks a turnaround from a strong year, with Broadcom up nearly 37% in 2024. AVGO YTD Broadcom, year-to-date
