After falling more than 25% to below $300 per share, semiconductor giant Broadcom (NASDAQ: AVGO) has staged a sizable recovery. Now trading near $400, the stock is up more than 10% in 2026 and has rebounded more than 30% from its 2026 lows.
In early April, Broadcom expanded its artificial intelligence (AI) chip partnerships with Google parent company Alphabet (NASDAQ: GOOGL) and Anthropic, jolting the stock. Around a week later, Broadcom announced the expansion of its partnership with another massive customer: Meta Platforms (NASDAQ: META).
Importantly, amid these developments and Broadcom’s return to $400, the stock’s forward price-to-earnings (P/E) ratio has fallen considerably amid heightened expectations for forward earnings. This lowers the risk of the stock repeating its late-2025 to early-2026 drawdown.
Meta and Broadcom Work on 2nm AI Chips, Extend Partnership Through 2029
With their latest announcement, Broadcom and Meta have confirmed that their strong business relationship will continue for years to come. The firms will collaborate on the future generations of Meta’s custom AI chips over the next three years, extending their partnership through 2029. While the long-standing nature of their relationship wasn’t much in question, this announcement provides increased visibility for Broadcom going forward.
Broadcom and Meta say they will roll out the world’s first two-nanometer (2nm) AI accelerator, a notable technological milestone. Low-nanometer chips are often considered shorthand for “more advanced," signaling that Meta and Broadcom are working on the cutting edge of AI technology. However, nanometers are just one factor that determines how powerful a chip and its surrounding system are.
In light of the deal, Broadcom CEO Hock Tan will not run for re-election to Meta’s Board of Directors.
Price Targets Hold Steady Amid Meta Announcement
The companies say their initial commitment exceeds one gigawatt (GW) and is the first phase of a multi-GW rollout. This lines up with Broadcom’s past statements regarding Meta in its last earnings call. Analysts use GWs to describe the size of data center deployments. A multi-GW partnership with Meta has significant financial implications for Broadcom. Bernstein analyst Stacy Rasgon estimates that the company brings in around $20 billion in revenue per GW.
Notably, Broadcom and Meta’s partnership extends beyond just custom AI processors but also into networking components. Networking components include Ethernet switches, which direct the flow of data and allow processing chips to communicate. While Broadcom’s XPUs get most of the attention, networking is a very significant part of Broadcom’s AI business. Next quarter, Broadcom expects its total AI revenue to rise by 76% year over year (YOY) to $14.8 billion. It expects 40% to come from networking, implying sales of $5.92 billion.
On the day of this announcement, Broadcom shares climbed by approximately 4.2%. Still, MarketBeat has not tracked any Wall Street analysts who have updated their price targets since. This comes as much of the information in this release was already accepted.
Nonetheless, the confirmation that Meta and Broadcom’s relationship extends through 2029 is a positive sign.
Despite not receiving upgrades and strong share price appreciation, Wall Street analysts continue to take a bullish outlook on Broadcom stock. The MarketBeat consensus price target on shares sits near $435, a figure that implies a bit less than 10% upside in shares. However, targets updated after Broadcom’s most recent earnings report are considerably more optimistic. They average approximately $489, suggesting the stock could rise by more than 20%. These updated targets range as high as $545, and only as low as $450.
Financials and Outlook Catch Up: Broadcom’s Forward P/E Tanks Despite Return to $400
Investors following Broadcom closely will remember the last time shares traded near $400. This came in early December 2025, with Broadcom hitting an all-time high closing price of $411. From that point, Broadcom went on to drop by 29% through late March. Given this history, and with the stock now trading back near this level, it is fair for investors to feel some concern.
However, there is one fundamental difference between Broadcom’s $400 price today and its $400 price in December 2025. In December, the stock’s forward P/E ratio hovered near 47x to 49x. Now, AVGO’s forward P/E is drastically lower, at around 30x.
This comes as Broadcom’s financials and outlook have improved significantly over this time. Due to this, the stock trades at a similar price, but with much higher earnings expectations, allowing its forward P/E to fall over 30%. In short, Broadcom’s current price is now more supported by its near-term outlook, making it less likely that the dramatic fall seen post-December will repeat. Overall, the stock’s 30x P/E ratio is just slightly above its three-year average of 29x.
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The article "Broadcom & Meta Extend AI Pact Into 2029 as Shares Climb to $400" first appeared on MarketBeat.
