Goldman Sachs revamps Broadcom stock price target with a twist

Core Viewpoint - Broadcom's stock has surged over 66% year-to-date, approaching a $2 trillion valuation, with Goldman Sachs analyst James Schneider raising the price target from $380 to $435, emphasizing its critical role in the AI boom [1][3][6] Group 1: Stock Performance and Analyst Insights - Broadcom's stock is under pressure due to high expectations for Q4, with investors anticipating strong results and guidance exceeding $11 billion in AI sales for fiscal 2026 [2][5] - The stock now trades at over 28 times forward sales and 55 times forward cash flows, reflecting its significant market momentum [5][6] Group 2: Q4 Expectations and Revenue Projections - Consensus estimates for Q4 indicate earnings of approximately $1.87 per share on sales between $17.0 billion and $17.4 billion, with Broadcom's own guidance at the higher end of this range [7][8] - The AI chip segment is projected to generate $6.2 billion in Q4, marking a 66% year-over-year increase and accounting for over a third of total sales [8][9] Group 3: Key Revenue Drivers - Key areas of focus for investors include AI revenue guidance for 2026, sales contributions from Google and OpenAI, and the maintenance of high margins amid rapid growth in the custom XPU business [4][6] - Infrastructure software, particularly from VMware, is expected to contribute $6.7 billion, growing at 15%, alongside a record backlog of $110 billion and new orders exceeding $10 billion from a fourth major AI customer [9]