Broadcom rises as Wall Street praises results, generative AI exposure
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Broadcom (NASDAQ:AVGO) shares rose in premarket trading on Friday after the semiconductor company reported strong first-quarter results and guidance, leading to praise from Wall Street.
Bank of America analyst Vivek Arya reiterated the firm's buy rating and raised its per-share price target to $725 on Broadcom (AVGO), noting that the company's new disclosure of generative AI exposure is a positive for investors. 
"Trading at just 13-14x PE, [Broadcom] provides perhaps the most compellingly valued exposure to the fast-growing generative AI market," Arya wrote in an investor note.
On the company's earnings call, Broadcom (AVGO) said it expects high-speed cloud switch sales related to generative AI to rise four-fold to $800M, while accelerator sales are expected to rise 50% year-over-year to $3B.
Bernstein analyst Stacy Rasgon was also impressed with the AI disclosure, positing that Broadcom (AVGO) may be an "AI story at a smartphone price."
Looking beyond AI, Rasgon added that Broadcom's (AVGO) overall execution is "stellar" and has more revenue stability, channel and customer management and cash generation and margins that are "absolutely best in class." Additionally, if the VMware (NYSE:VMW) deal ever closes, it will add more value to the company, Rasgon explained.
VMware (VMW), which is in the process of being acquired by Broadcom (AVGO) for $61B in cash and stock, also reported fourth-quarter results on Thursday.
KeyBanc Capital Markets analyst John Vinh was also impressed with the results, including infrastructure service and hyperscale spending, while adding that the VMware (VMW) is expected to close this fiscal year.
"We expect the acquisition to be immediately accretive and will add EPS accretion of $10.12 for [fiscal 2024]," Vinh wrote, adding that Broadcom (AVGO) has already received regulatory approval from Brazil, South Africa, Canada, Germany, France, Austria, Denmark, Italy and New Zealand.
In addition to reporting results and guidance, Broadcom (AVGO) declared its quarterly dividend on Thursday, payable to shareholders of record as of March 22 on March 31.