Broadcom (AVGO) Stock Could Nearly Double: Cantor Fitzgerald Sets $600 Price Target

Key Takeaways

• C.J. Muse of Cantor Fitzgerald elevated Broadcom’s price target from $525 to $600, representing approximately 68% potential upside from its current trading price of $357.90
• The chipmaker delivered fiscal Q3 revenue of $29.59 billion, marking an 85.5% year-over-year increase, while AI semiconductor sales exploded 221% to reach $16.7 billion
• Management elevated its fiscal 2027 AI revenue projection to $115 billion and unveiled an inaugural fiscal 2028 AI revenue forecast of $230 billion
• Shares declined following the earnings report as Q4 revenue guidance of $34.8 billion fell marginally short of Wall Street’s $35 billion projection
• The company announced a $0.65 per share quarterly dividend, scheduled for distribution on September 30 to investors recorded as of September 21

Trading at $357.90 and retreating from its recent peaks, Broadcom (AVGO) stock may be significantly undervalued according to Cantor Fitzgerald’s latest analysis. C.J. Muse, the firm’s analyst, has boosted his valuation target to $600, projecting 68% appreciation potential based on the semiconductor giant’s accelerating artificial intelligence business.

Broadcom Inc., AVGO

Muse’s upgraded outlook arrived on September 3, immediately following Broadcom’s fiscal third quarter earnings announcement. The technology company delivered revenue totaling $29.59 billion, surpassing Wall Street’s $29.36 billion expectation. Per-share earnings reached $3.32, exceeding the consensus forecast of $3.22 by ten cents.

The year-over-year revenue expansion registered at 85.5%. However, that metric isn’t capturing the market’s primary attention.

Revenue from AI semiconductors climbed to $16.7 billion, representing a staggering 221% increase compared to the equivalent period last year. This particular metric is fundamentally reshaping analyst perspectives on the company’s growth trajectory.

During the earnings conference call, Broadcom increased its fiscal 2027 AI revenue projection from above $100 billion to $115 billion. Management proceeded even further, providing an unprecedented fiscal 2028 AI revenue forecast of $230 billion. This would position total 2028 revenue around $285 billion, approximately $50 billion beyond current Street expectations.

Muse’s financial model now projects 2028 earnings per share reaching $35, substantially higher than the prevailing consensus estimate of $27.39. His $600 valuation target represents approximately 17 times that earnings projection.

Understanding the Post-Earnings Decline

Notwithstanding the impressive results, AVGO shares retreated following the announcement. Two primary factors contributed to the decline.

The fourth quarter revenue forecast of $34.8 billion landed marginally below Wall Street’s $35.03 billion expectation. This modest shortfall proved sufficient to spark a profit-taking response. Additional pressure emerged from weakness across the broader semiconductor sector, as investors captured gains following an extended rally.

Muse contends the market is exercising excessive caution considering the substantial scale and clarity of Broadcom’s existing order pipeline.

Production Bottlenecks Present Ongoing Challenges

Cantor highlighted that Broadcom confronts constrained supply dynamics extending through fiscal 2027. These limitations span multiple areas including advanced wafer capacity, substrate availability, high-bandwidth memory components, and CoWoS packaging capabilities.

In essence, Broadcom’s obstacle isn’t locating willing buyers. The constraint lies in manufacturing sufficient volume to satisfy existing demand.

Institutional demand continues running strong. Stonehage Fleming expanded its Broadcom holdings by 14.8% during Q2, purchasing an additional 78,556 shares to bring its total position to approximately $230.7 million. Institutional ownership accounts for 76.43% of outstanding shares.

Following its VMware acquisition, Broadcom maintains approximately $65 billion in outstanding debt against roughly $20 billion in liquid assets. While cash generation adequately services this obligation, the leverage merits ongoing monitoring.

The technology firm also authorized a $0.65 per share quarterly dividend distribution, with payment scheduled for September 30 to registered shareholders as of September 21. The annualized dividend totals $2.60 per share, delivering a yield of approximately 0.7%.

Wall Street consensus includes thirty-one analysts maintaining Buy ratings, with four recommending Hold positions. The mean price target stands at $500.60. Macquarie recently elevated the stock to Outperform, while UBS downgraded its recommendation from Buy to Hold.

AVGO’s 52-week trading range extends from $289.96 to $495.00.