Broadcom Gets Second $420 Target as CPO Win Boosts Outlook

Core Insights - Broadcom's stock has seen a decline of 6% from its all-time high of nearly $369 on September 10, currently trading at $324.63 [1] - Analysts are increasingly bullish on Broadcom, with multiple price targets now exceeding $400, indicating a potential upside of approximately 22% [3] - The average price target post-earnings is $384, suggesting an 11.3% upside, contrasting with the MarketBeat consensus forecast of around $357, which implies only a 3.5% upside [4] Analyst Sentiment - KeyCorp analyst John Vihn raised his price target for Broadcom from $400 to $420, joining other analysts with similar bullish targets [3] - The number of analysts with price targets above $400 has increased from two to three, reflecting growing confidence in Broadcom's stock [3] - The overall analyst sentiment remains positive, with a Buy rating and a projected earnings growth of 18.59% [9] Long-term Growth Potential - Co-packaged optics (CPO) is identified as a significant long-term growth opportunity for Broadcom, potentially driving future revenue [2][7] - Broadcom generated $25 billion in free cash flow over the last 12 months, positioning the company well to invest in emerging technologies like CPOs [8] - CPO technology is expected to see increased demand as AI data centers evolve, with CEO Hock Tan predicting a shift to optical interconnects within one to two years [9][11] CPO Technology Insights - CPOs offer advantages over traditional copper-based interconnects, including 65% less power consumption [9] - Recent tests of Broadcom's CPO technology at Meta Platforms demonstrated reliability, achieving one million link hours without connectivity disruption, enhancing its viability for hyperscalers [11] - Despite historical failure rates of 5% to 8% for optical connections, the advancements in CPO technology may mitigate these risks [10]