Broadcom (AVGO) Gets Bullish Boost: ‘Must-Own’ AI Stock, Says Melius Research

We recently published a list of 10 AI Stocks on Wall Street’s Radar. In this article, we are going to take a look at where Broadcom Inc. (NASDAQ:AVGO) stands against other AI stocks on Wall Street’s radar.

On May 28, Melius Research raised the firm’s price target on Broadcom Inc. (NASDAQ:AVGO) to $283 from $198 and kept a “Buy” rating on the shares. Broadcom is a technology company uniquely positioned in the AI revolution owing to its custom chip offerings and networking assets.

Analysts at Melius Research noted that the company’s momentum in the past year has been “materializing better than we expected.” The company is all prepared to accelerate sales of its artificial-intelligence chips, which include custom AI accelerators and networking chips.

A technician working at a magnified microscope, developing a new integrated circuit.

Moreover, since the company is a market leader, it is also likely to see higher profits from its ownership of VMware, a cloud-computing business. The company acquired VMware in 2023. The analysts noted that Broadcom Chief Executive Hock Tan “has created a portfolio of high-margin and sticky assets.”

Moreover, Broadcom is “still one of the ‘must-own’ AI stocks,” the firm believes. With its customer base growing and AI hyperscalers focusing on developing reasoning models, its switching business, which makes up about 30% of total AI revenue, “should accelerate as well over the next few years as AI clusters scale out.”

The firm has said that there is more for Broadcom as AI customer wins pick up pace and execution remains sharp in Infrastructure Software.

Overall, AVGO ranks 5th on our list of AI stocks on Wall Street’s radar. While we acknowledge the potential of AVGO as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than AVGO and that has 100x upside potential, check out our report about this cheapest AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.