11:10 AM EST, 12/09/2024 (MT Newswires) -- Broadcom ( AVGO ) fiscal Q4 earnings are expected to meet guidance but not exceed it given a slowdown in the transition to Tensor Processing Unit version 6 that impacted the application-specific integrated circuit business, Morgan Stanley said in an earnings preview Monday.

The company remains well-positioned for long-term growth in artificial intelligence and AI-related revenue is projected to grow from $12 billion in fiscal 2024 to $15 billion in fiscal 2025, with faster growth in net growth in networking versus ASICs, according to the note.

ASIC business is facing near-term challenges, including slower customer ramp-ups and the concentrated nature of its customer base, Morgan Stanley said. However, its superior design capabilities and intellectual property create a strong competitive moat, especially against Asian competitors.

Morgan Stanley also said that Broadcom's ( AVGO ) enterprise and storage semiconductor businesses are recovering from a recent downturn, while the wireless segment faces challenges due to the impact of Apple's ( AAPL ) potential shift away from its Wi-Fi combo chip.

The brokerage has an overweight rating on the stock, with a $180 price target.

Price: 179.05, Change: -0.48, Percent Change: -0.27