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Broadcom’s (AVGO) AI Role Acknowledged, But Valuation Concerns Remain

Broadcom Limited (NASDAQ:AVGO) is one of the AI Stocks to Watch. One global technology firm with a robust structural AI opportunity ahead is Broadcom. On February 12, DA Davidson analyst Gil Luria initiated coverage on Broadcom Limited (NASDAQ:AVGO) with a Neutral rating and a price target of $335.

While analysts acknowledge AVGO’s structural AI opportunity, they believe long-term customer behavior could cap upside. The firm, in particular, expressed concerns about the long-term sustainability of Broadcom’s position in the AI application-specific integrated circuit (ASIC) market. This is despite these components gaining growing importance in the market.

While AI ASICs have been becoming increasingly important for labs and hyperscalers that pursue workload-specific accelerators, analysts believe significant headwinds exist for suppliers like Broadcom.

The relevance of the AI ASIC has grown increasingly more important as labs/hyperscalers pursue more workload-specific accelerators. And while we respect the role of design partners in bringing these programs to volume, we see a potential path for the largest of customers to internalize more of the stack in the next few years, pressuring supplier economics. Under this assumption, we do not believe Broadcom’s AI ASIC exposure warrants a premium multiple versus market leaders such as NVIDIA, and initiate coverage with a NEUTRAL rating and $335 price target.

Sergiy Zavgorodny/Shutterstock.com

Broadcom is a technology company uniquely positioned for the AI revolution, thanks to its custom chip offerings and networking assets.

While we acknowledge the potential of AVGO to grow, 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.

READ NEXT: 30 Stocks That Should Double in 3 Years and 11 Hidden AI Stocks to Buy Right Now.

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

The $250 Trillion AI Hype is Real. A few years from now, you’ll probably wish you’d bought this stock.

When Jeff Bezos said that one breakthrough technology would shape Amazon’s destiny, even Wall Street’s biggest analysts were caught off guard.

Fast forward a year and Amazon’s new CEO Andy Jassy described generative AI as a “once-in-a-lifetime” technology that is already being used across Amazon to reinvent customer experiences.

At the 8th Future Investment Initiative conference, Elon Musk predicted that by 2040 there would be at least 10 billion humanoid robots, with each priced between $20,000 and $25,000.

Do the math. According to Musk, this technology could be worth $250 trillion by 2040.

Put another way, that’s roughly equal to:

  • 175 Teslas
  • 107 Amazons
  • 140 Metas
  • 84 Googles
  • 65 Microsofts
  • And 55 Nvidias

And here’s the wild part — this $250 trillion wave isn’t tied to one company, but to an entire ecosystem of AI innovators set to reshape the global economy.

It’s a leap so massive, it could reshape how businesses, governments, and consumers operate worldwide.

Even if that $250 trillion figure sounds ambitious, major firms like PwC and McKinsey still see AI unlocking multi-trillion-dollar potential.

How could anything be worth that much?

The answer lies in a breakthrough so powerful it’s redefining how humanity works, learns, and creates.

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In fact, Verge argues this company’s supercheap AI technology should concern rivals.

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  • Bill Gates sees artificial intelligence as the “biggest technological advance in my lifetime,” more transformative than the internet or personal computer, capable of improving healthcare, education, and addressing climate change.
  • Larry Ellison — through Oracle, is spending billions on Nvidia chips and partnering with Cohere to embed generative AI across Oracle’s cloud and apps.
  • Warren Buffett — not known for tech hype — says this breakthrough could have a ‘hugely beneficial social impact.

When billionaires from Silicon Valley to Wall Street line up behind the same idea — you know it’s worth paying attention to.

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