Morgan Stanley drops eye-popping Broadcom price target after event

Core Viewpoint - Broadcom reported strong Q4 results but experienced a significant stock decline, with shares dropping 11% and losing over $200 billion in market value in one day [1][4]. Financial Performance - Q4 sales reached nearly $18 billion, exceeding expectations, with a Q1 sales outlook of $19.1 billion, surpassing the market estimate of $18.31 billion [1][6]. - The company reported an EPS of $1.95, beating market estimates by eight cents, marking a 28.18% year-over-year revenue increase [1][8]. Market Reaction - Despite solid earnings, the market reacted negatively due to management's warning that rising AI-chip demand would compress gross margins by 100 basis points [2][9]. - Analysts from major banks have varied price targets for Broadcom, with Bank of America setting a target of $500, Goldman Sachs at $450, UBS at $472, and Bernstein at $475, all indicating significant upside potential [9]. Analyst Insights - Morgan Stanley's analyst Joseph Moore reaffirmed an overweight rating and increased the price target from $443 to $462, viewing the long-term setup as "very strong" and suggesting the recent stock decline is an overreaction [2][3].