Broadcom Shares Gain Following Upgrade From D.A. Davidson

Broadcom shares increased by 2.5% during premarket trading on Tuesday after receiving an upgrade from investment firm D.A. Davidson.

D.A. Davidson analyst Gil Luria upgraded the tech giant, led by Hock Tan, from Neutral to Buy while raising the price target on the stock from $350 to $400. In a note to clients, Luria explained that an analysis of the Anthropic S1 suggests the initial public offering will proceed, with Anthropic raising capital, followed by OpenAI raising more capital in its own IPO next year. This progression is expected to allow Broadcom to meet its expectations over the next couple of years. Luria noted that at the current 16x multiple on 2027 earnings per share, Broadcom is trading as if the probability of these events is near zero, creating significant upside potential if the deals materialize.

Furthermore, Luria highlighted a major market dislocation where companies such as Broadcom, Micron, and Nvidia are trading as though the artificial intelligence spending boom has ended, whereas the rest of the artificial intelligence trade continues to act as if the cycle will persist. He stated that underlying fundamentals will lead to mean reversion, expressing doubt that a scenario exists where several semiconductor companies perform well while Nvidia, Micron, and Broadcom struggle.