Broadcom Inc (NASDAQ:AVGO) shares rallied in early trading on Friday on media reports of its possible partnership with OpenAI, which is gearing up to mass-produce its first proprietary AI chip.
AVGO stock is at important technical levels. Check out the latest moves here.
Here are some analyst takeaways.
- BofA Securities analyst Vivek Arya maintained a Buy rating, while raising the price target from $300 to $400.
- KeyBanc Capital Markets analyst John Vinh reiterated an Overweight rating, while lifting the price target from $330 to $400.
- Rosenblatt Securities analyst Kevin Cassidy reaffirmed a Buy rating, while raising the price target from $340 to $400.
- Benchmark analyst Cody Acree maintained a Buy rating, while raising the price target from $313 to $385.
- Goldman Sachs analyst James Schneider reiterated a Buy rating, while raising the price target from $340 to $360.
- JPMorgan analyst Harlan Sur reaffirmed an Overweight rating, while lifting the price target from $325 to $400.
Check out other analyst stock ratings.
BofA Securities: Broadcom has added a fourth large customer for its custom AI chip (XPU), along with Alphabet, Meta Platforms and TikTok-parent ByteDance, Arya said in a note. The latest customer, which could be OpenAI, will add around $10 billion in the back half of fiscal 2026, he added.
This puts Broadcom's AI growth in fiscal 2026 closer to 110%, versus the prior forecast of 55%-60%, the analyst stated. "AVGO suggested growth could accelerate further into FY27E on additional programs, new customers," he further wrote.
KeyBanc Capital Markets: Broadcom had reported strong fiscal third-quarter results, with revenues of $16 billion beating consensus of $15.8 billion, and earnings of $1.69 per share topping consensus of $1.66 per share, Vinh said. Management guided to fiscal fourth-quarter revenues of $17.4 billion, he added.
The adjusted EBITDA growth guidance of 67% implies earnings of $1.86 per share, higher than consensus of $1.80 per share, the analyst stated. Broadcom said it has secured orders for a fourth AI customer, with revenues "expected to contribute an incremental $10B in FY26," he further wrote.
Rosenblatt Securities: Broadcom's higher-than-expected revenues in the July quarter were "driven by strong demand for AI semiconductors, continued growth in VMware and infrastructure software, and a robust recovery in broadband," Cassidy said. The company added a fourth major customer and announced that CEO Hock Tan will continue leading through at least 2030, he added.
Broadcom's AI revenue during the quarter came in at $5.2 billion, representing 63% year-on-year growth, the analyst stated. "We continue to view AVGO as a core holding in any AI-focused portfolio," he further wrote.
Benchmark: Broadcom's results and guidance were similar to Nvidia‘s strong quarter than Marvell Technology’s "more lackluster performance," Acree said. The results indicated continued "aggressive AI industry investment activity," he added.
The most impressive aspect was the company's AI semiconductor revenue growth of 63% year-on-year and 23% sequentially, the analyst stated. This is expected to "accelerate by another 66% year-over-year, or 19% sequentially, to $6.2 billion in Q4," he further wrote.
Goldman Sachs: Despite elevated expectations, Broadcom reported solid quarterly results and announced guidance above consensus estimates, Schneider said. "We believe the most significant development was Broadcom’s announcement that it has converted another new custom silicon customer focused on inference," he wrote.
The new customer is expected to help drive “material” upside to management’s prior guidance of AI Semiconductor revenue growth of around 60% in fiscal 2026, the analyst stated. The current total backlog of more than $110 billion provides "significant business visibility over the next two years," he added.
JPMorgan: Broadcom's better-than-expected results and solid revenue outlook were driven by "accelerating AI demand, stabilizing non-AI semiconductors and continued solid momentum from VMware," Sur said.
AI revenues of $5.2 billion in the fiscal third quarter and expectations of $6.2 billion in the fiscal fourth quarter put Broadcom on track to drive around $20 billion in AI revenues in fiscal 2025, he added.
AVGO Price Action: Shares of Broadcom had risen by 9.07% to $333.86 at the time of publication on Friday.
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