JPMorgan reiterated an Overweight rating on Broadcom stock on June 17, calling investors “aggressive buyers” at current levels, with a $580 price target representing 46% upside from recent trading.
Broadcom shares have rebounded sharply following the June 3 earnings report that initially sparked a selloff. The semiconductor and software company reported Q2 results that missed Wall Street’s revenue expectations, sending shares down as much as 15% in the days following the announcement.
Despite the earnings disappointment, JPMorgan analysts Harlan Sur and Mayur Ramdhani wrote that they would be buying Broadcom stock given the recent decline. The stock has fallen 17% from its record closing high of $481.57 on June 2, yet remains up 15% for the year and 60% over the past 12 months.
Sur wrote that JPMorgan “would be aggressive buyers at current levels” as the company continues to have “significant dominance” in advanced chip packaging design, cadence of new designs, and its intellectual property portfolio. JPMorgan believes the market underestimates Broadcom’s 18-plus month lead in chip and advanced packaging design.
A key concern for investors has centered on CEO Hock Tan’s comments about major customer Google likely diversifying its semiconductor supply chain. However, JPMorgan dismissed these concerns, noting that “contrary to the recent noise from sell-siders,” Broadcom and Google have not delayed or canceled the next-generation Google TPU (Tensor Processing Unit) program and remain on track to ramp up production.
Broadcom has helped Alphabet bring to market 14 of its most advanced chip designs over the past 12 years, with the companies now having developed eight generations of Google’s TPU chips. The Alphabet partnership spans a decade.
Broadcom has been a major beneficiary of the AI data center boom. While Nvidia still leads in AI computing chips, Broadcom designs custom alternatives for six customers, including Alphabet and OpenAI. The company is also a leader in networking chips, another major contributor to its AI data-center business.
In Q2, Broadcom reported AI chip revenue of $10.8 billion, more than double from the prior year. The company forecast AI chip sales of approximately $16 billion for the third quarter, slightly below the $16.36 billion expected by analysts, contributing to the post-earnings decline.
JPMorgan’s bullish stance is not an outlier on Wall Street. According to FactSet, 51 of 55 firms polled rate the stock at Buy, with an average price target of $523.67.
Sources
- Barron’s — JPMorgan analysts Harlan Sur and Mayur Ramdhani reiterated Overweight rating with $580 price target and “aggressive buyers” call; Broadcom’s dominance in advanced packaging and Google partnership details
- Yahoo Finance — JPMorgan Overweight rating, $580 price target, 38% upside; analyst ratings breakdown
- Reuters — Broadcom Q2 revenue miss, stock decline, and guidance details
- TipRanks — Broadcom’s 17% decline from June 2 record high; JPMorgan’s aggressive buyer call and dominance claims
- TradingView — JPMorgan maintained Overweight rating with $580 price target based on current trading levels
