Broadcom(US:AVGO) 247Wallst·2026-02-16 19:39Core Viewpoint - Wall Street analysts see a potential 29% upside for Broadcom (AVGO) following a recent selloff, despite concerns over valuation and guidance after a significant earnings report [1]. Financial Performance - Broadcom reported a $73 billion AI backlog but experienced an 11% drop in stock price after earnings due to valuation concerns [1]. - The company anticipates Q1 2026 AI revenue to double year-over-year to $8.2 billion, indicating strong growth potential [1]. Market Sentiment - Retail investor interest surged, with mentions of Broadcom peaking at 96 comments on Reddit on February 16 [1]. - Cathie Wood's ARK Invest purchased $10.7 million worth of AVGO shares, and Ray Dalio's Bridgewater Associates added 320,349 shares, reflecting bullish sentiment among analysts [1]. Analyst Ratings - Out of 43 top analysts, 38 rated Broadcom as "Strong Buy" or "Buy," with a consensus 12-month price target of $420.04, suggesting a 29% upside [1]. - DA Davidson issued a "Neutral" rating due to valuation concerns and risks associated with hyperscalers potentially building chips in-house [1]. Strategic Factors - Broadcom's backlog includes orders from five hyperscale customers for custom AI chips, enhancing revenue visibility [1]. - The company expects operating margin dollars to grow through scale leverage, supported by customer diversification and strong demand for its products [1]. Insider Activity - CEO Hock Tan sold 130,000 shares, and Director Henry Samueli sold 391,339 shares, raising questions about insider confidence in the company's future [1]. - Tan cautioned that the $73 billion backlog should not be viewed as guaranteed revenue, describing it as a "moving target" [1]. Competitive Landscape - Broadcom trades at 68 times trailing earnings, compared to NVIDIA's 45 times, with NVIDIA having higher profit margins [1]. - Analysts project Broadcom's free cash flow to grow from $26.9 billion in 2025 to $107 billion by 2029, indicating strong financial health [1].