Broadcom Stock Dips Amid DeepSeek AI Chatbot Fears, Analysts Remain Bullish

NEW YORK, NY — Broadcom Inc. (AVGO) shares experienced a significant drop following the unveiling of DeepSeek, a Chinese AI chatbot that requires less computational power, sparking concerns about reduced demand for AI chips. The stock decline occurred despite Broadcom reporting $51.6 billion in sales for 2024, a 44% year-over-year increase.

On the Pulse, a top investor ranked in the top 3% of TipRanks‘ stock professionals, dismissed these fears as misplaced. “Despite DeepSeek’s rise, demand for U.S.-produced AI hardware, including Broadcom’s custom AI chips, remains strong, ensuring continued sales and profit growth,” the investor stated. On the Pulse emphasized that Broadcom is one of the few companies capable of providing the critical computing infrastructure required by American firms.

Broadcom’s sales are projected to grow by 12% to over $61 billion this year, with gross margins expected to remain in the high 70s in 2025. The investor also noted that Broadcom’s current valuation, trading at 27x leading profits, is slightly cheaper than Nvidia’s 28x. “The DeepSeek-inspired crash on Monday created a whole bunch of new investment opportunities, and Broadcom is one hardware company that I would specifically recommend investors to buy on the dip,” On the Pulse concluded, rating AVGO a Buy.

Wall Street analysts share this optimism, with 23 Buy and 3 Hold ratings giving AVGO a Strong Buy consensus rating. The 12-month average price target of $236.29 suggests potential gains of approximately 8.5%.