Broadcom’s Strategic Momentum: Dividend Hikes and Bullish Targets Signal AI Strength

A wave of bullish sentiment is sweeping across Wall Street for Broadcom Inc., with major financial institutions aggressively raising their price targets. This coordinated optimism coincides with the company's latest financial disclosures and a significant commitment to shareholder returns, painting a picture of a firm capitalizing powerfully on the artificial intelligence revolution.

Leading the charge, Bank of America has elevated its price objective for Broadcom to $500, implying a potential upside of over 40% from recent trading levels. This move is part of a broader consensus. Morgan Stanley increased its target to $462, while Goldman Sachs adjusted its forecast upward to $450. Market experts attribute this synchronized reassessment to a strengthened conviction in Broadcom's strategic positioning within the high-growth AI semiconductor market.

The timing of these upgrades is notable, as they align with Broadcom's announcement of a 10% increase in its quarterly dividend to $0.65 per share. This marks the fifteenth consecutive annual raise. On an annualized basis, the dividend now stands at $2.60 per share. While the yield remains modest at approximately 0.75%, the consistent growth underscores the company's robust and expanding cash flow generation, which surged 39% year-over-year in fiscal 2025.

Further reinforcing its capital return strategy, the company has extended its existing share repurchase authorization through the end of 2026, with $7.5 billion remaining available under the program.

Should investors sell immediately? Or is it worth buying Broadcom?

AI Revenue Acceleration and Market Position

The financial figures substantiate the analysts' upgraded outlook. Broadcom's AI semiconductor revenue for fiscal 2025 jumped 65% to reach $20 billion. Management guidance for the current first quarter projects a doubling of AI-related revenue to $8.2 billion compared to the same period last year.

Concerns about rising competition in the Application-Specific Integrated Circuit (ASIC) space are being dismissed by some observers. Analysts at Bernstein, for instance, contend that Broadcom remains the essential partner for hyperscale cloud providers who are developing custom AI chips alongside their deployments of Nvidia's solutions. Meanwhile, the integration of VMware continues to provide a stabilizing force, with the infrastructure software segment delivering $6.9 billion in revenue last quarter, a 19% increase.

Navigating the Margin Landscape

A shift in the company's sales approach toward complete AI server racks had previously prompted some investor concern about potential pressure on gross margins. The market, however, appears to be looking beyond any near-term margin compression, focusing instead on the substantial long-term growth in volume and scale.

Upcoming quarterly results will be closely watched for signs of margin stabilization as the product mix evolves to include more AI infrastructure hardware. Broadcom's shares are currently trading near all-time highs, having reclaimed key technical levels and reflecting the market's revised, more confident assessment.