Key Takeaways
- Bernstein’s Stacy Rasgon assigns “outperform” rating to Broadcom, describing valuation as “absurdly attractive”
- Analyst emphasizes AI infrastructure demand “shows no signs of slowing”
- Recent quarterly results showed revenue growth of 16% alongside profit surge of 173%
- Wall Street projections suggest EPS could exceed $20 by fiscal 2027, up from $5.12 trailing twelve months
- Multiple firms maintain bullish stance: Cantor Fitzgerald eyes $525 target, Rosenblatt sets $500 price objective
Shares of Broadcom (AVGO) climbed 4.7% during Monday’s trading session following a positive research note from Bernstein analyst Stacy Rasgon, who highlighted the chipmaker as a premier investment opportunity in AI infrastructure.
Rasgon assigned an “outperform” rating to Broadcom while disclosing that Bernstein maintains a position in the stock within its own investment holdings. The analyst issued an identical recommendation for Nvidia (NVDA), which gained 1.65% during the same session.
The timing of this bullish call carries particular significance. After reaching a peak of $413 per share on December 10, Broadcom shares had retreated approximately 22% amid broader market uncertainty surrounding artificial intelligence investments.
Rasgon directly challenged this pessimistic outlook. “AI demand currently shows no signs of slowing,” the analyst stated, referencing Broadcom’s latest quarterly performance as evidence. The semiconductor giant delivered a 16% sales increase accompanied by a remarkable 173% profit expansion.
With shares trading near $321, Rasgon characterizes the current price level as presenting significant value. His financial model anticipates earnings per share reaching $20 or higher for fiscal year 2027, implying the stock trades at approximately 16 times projected forward earnings.
Breaking Down the Profit Trajectory
That forward earnings multiple becomes particularly compelling when examining Broadcom‘s recent performance baseline. Over the trailing twelve-month period, the company generated earnings of just $5.12 per share. Achieving the $20 threshold by 2027 would represent nearly 400% earnings expansion over two years — translating to roughly 100% annual growth.
Based on current trailing profits, the stock carries a multiple of approximately 60 times earnings. Rasgon’s investment thesis centers on a simple premise: if the anticipated growth materializes, today’s 60x multiple will appear remarkably inexpensive in retrospect.
Additional Wall Street research firms have echoed this optimistic perspective. Cantor Fitzgerald reaffirmed its Overweight rating on March 5 with a $525 price objective, following Broadcom’s first-quarter fiscal 2026 earnings release.
Cantor’s analysis highlighted management commentary indicating that networking solutions could represent as much as 40% of total AI-related revenue. The firm subsequently increased its earnings estimates, now projecting $23 to $25 per share as attainable, surpassing its previous $20 forecast for 2027.
Wall Street Price Targets Converge Higher
Rosenblatt Securities also updated its outlook on March 5, elevating its price target to $500 while maintaining a Buy recommendation. The firm referenced CEO Hock Tan’s statements that fiscal 2027 revenue visibility has “significantly improved.”
Both research houses identified the $100 billion AI chip revenue benchmark as a critical milestone. Cantor expects Broadcom to exceed that threshold during fiscal 2027, forming the foundation for their bullish investment cases.
Cantor positioned Broadcom among its highest-conviction recommendations alongside Nvidia, underscoring the belief that AI semiconductor demand continues to strengthen despite recent share price volatility.
Broadcom conducts business through two primary divisions: Semiconductor Solutions and Infrastructure Software.
At the close of trading, AVGO shares stood at $321.15, representing a gain of $11.29 for the session, with the company maintaining a market capitalization of approximately $1.5 trillion.
