Is Broadcom Stock Going to $2,100 on the Heels of Its 10-for-1 Stock Split Announcement? 1 Wall Street Analyst Thinks So.

There’s no getting around the impact of artificial intelligence (AI) in tech circles since early last year, and Broadcom (NASDAQ: AVGO) is a key player in the space. The company’s semiconductors and data center infrastructure play a critical part in the AI ecosystem, which has lit a fire under the stock. Its price has nearly doubled over the past year, resulting in a high-profile stock split.

In the wake of Broadcom’s better-than-anticipated results, Wall Street is scrambling to revise its models, resulting in a tidal wave of higher price targets. One should be of particular interest to shareholders.

AI is driving this train

Analysts at Benchmark reiterated their buy rating while boosting their price target on Broadcom to a Street-high $2,100. That represents a potential upside for investors of 40% over the coming year, compared to the stock’s closing price on Wednesday.

The analysts cited Broadcom’s “solid” second-quarter financial results and 10-for-1 stock split as “enough to send the Street into a buying frenzy.” They went on to point out that Broadcom’s increased outlook was modest and its AI guidance “rather conservative.”

I think the analysts are onto something. AI is quickly becoming a boon to Broadcom. In the company’s second-quarter report, management noted that the results “were once again driven by AI demand,” as sales of AI products hit a record $3.1 billion, or 25% of its total revenue.

Despite the robust gains, Broadcom raised its full-year outlook to $51 billion from $50 billion, an increase of about 2%. This suggests management was being cautious, which opens the door for a future beat and raise.

Broadcom stock is currently selling for 35 times forward earnings, which is an attractive price for a stock that has generated gains of 2,230% over the past decade. There’s likely more to come, which is why Broadcom is a buy.

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Danny Vena has no position in any of the stocks mentioned. The Motley Fool recommends Broadcom. The Motley Fool has a disclosure policy.

Is Broadcom Stock Going to $2,100 on the Heels of Its 10-for-1 Stock Split Announcement? 1 Wall Street Analyst Thinks So. was originally published by The Motley Fool