Broadcom Tops $300: What's Fueling Gains and a Key Risk to Watch

For investors in custom semiconductor designer Broadcom (NASDAQ: AVGO), June and July of 2025 have been extremely fruitful months. Broadcom first managed to notch a new all-time high closing price on June 2 of just under $249. This ended a nearly six-month drought since the stock reached its previous all-time closing high of $248 in mid-December 2024.

Since June 2, the stock has done anything but look in the rearview mirror. Broadcom shares achieved an additional 14 new all-time closing highs in June and July. The latest tally added to that scorecard comes on July 30, with Broadcom closing up just under $303 per share.

This comes as Broadcom received its latest price target increase, courtesy of analysts at Morgan Stanley.

Below, we’ll dive into this analyst’s latest update that has shares up nearly 2% on July 30. We’ll also look at other key news that has been driving Broadcom’s rally and point out a notable risk around the stock.

Morgan Stanley Boosts AVGO Target 25%, Upside Potential Exceeds Other Names

Morgan Stanley has substantially lifted its price target on Broadcom, moving its forecast from $270 to $338. The firm also lifted price targets on a variety of chip stocks. Upgrades include Advanced Micro Devices (NASDAQ: AMD), NVIDIA (NASDAQ: NVDA), and Marvell Technology (NASDAQ: MRVL). Comparing the shifts in these price targets provides some notable insights.

First off, Broadcom’s price target increase was the second largest of this group at over 25%. Morgan Stanley increased its AMD price target by 53%, NVIDIA’s by 14%, and Marvell’s by less than 10%. This suggests that among these stocks, Morgan Stanley's sentiment on Broadcom has undergone one of the most notable improvements.

Additionally, among these names, Morgan Stanley is indicating some of the most upside potential in Broadcom. Its $338 target implies that shares could rise by more than 11% from the July 30 close, tied with the upside the firm sees in NVIDIA. Meanwhile, implied appreciation figures sit at 3% for AMD and -2% for Marvell. Overall, the fact that Morgan Stanley appears to be relatively more bullish on Broadcom compared to other key chip players is a good sign for investors.

Analyst Upgrades, Semiconductor Strength & Google CapEx Help AVGO Shares Take Off

Multiple other factors have also contributed to Broadcom’s strong two months. This includes MarketBeat tracking over 15 analysts who have boosted their price target on the stock since Broadcom’s last earnings release on June 5.

Additionally, overall sentiment on semiconductor stocks has improved significantly. 

The iShares Semiconductor ETF (NASDAQ: SOXX) has returned around 21% since the beginning of June, moderately below Broadcom’s 25% return over the period.

Broadcom shares also closed up nearly 2% on July 24 after Google parent company Alphabet (NASDAQ: GOOGL) reported earnings. Google is one of Broadcom’s key custom artificial intelligence chip buyers.

Google lifted its capital expenditure (CapEx) guidance for 2025 from $75 billion to $85 billion. This increased spending forecast indicates that Broadcom could see more demand for its chips, a highly positive sign for investors.

AVGO’s Forward P/E Multiple Hits Record Levels, Setting Up a Consequential Q3

As often happens when a stock’s rally hasn’t come due to new earnings releases, Broadcom’s valuation multiples have surged in June and July. Since the beginning of June, Broadcom’s forward price-to-earnings (P/E) ratio has increased nearly 15% from 36x to over 41x.

That 41x figure marks Broadcom’s highest forward P/E ratio in its history. The ratio is around 5% higher than the nearly 40x mark the stock reached back in mid-December 2024.

With the stock’s forward P/E now in uncharted territory, the company faces increased pressure to deliver impressive fiscal Q3 2025 results. Significant selling pressure could emerge if Broadcom's coming earnings don't surpass expectations. Broadcom typically reports fiscal Q3 results at the end of August or early September.

Notably, Broadcom slightly beat expectations in its last earnings release. However, shares still dropped 5% in the subsequent trading session, and they were only at a 38x multiple going in. Thus, Broadcom would likely need to significantly beat expectations and may even need to increase its guidance to avoid a post-earnings sell-off.

Still, its earnings release is around a month away. The stock’s forward P/E could shift significantly by then, altering what kind of results markets would view as positive.

Overall, there are significant positive developments driving Broadcom shares higher. However, the level of Broadcom’s forward P/E is a key dynamic for investors to stay aware of as earnings approach.

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The article "Broadcom Tops $300: What's Fueling Gains and a Key Risk to Watch" first appeared on MarketBeat.