The latest quarterly results from Broadcom , due after the market close Thursday, are expected to help signal where the artificial intelligence trade is headed. A look at Wall Street’s estimates for the three months ended Oct. 31 suggest strong momentum for Broadcom’s custom chips business, which has attracted several hyperscalers looking for alternatives to Nvidia’s AI chips. Shares of Broadcom have jumped in recent weeks on news of potential partnerships and enthusiasm around its application-specific integrated circuits, or ASICs, business, a growing market in AI chips. The Information reported earlier this week that Microsoft could be looking to partner with Broadcom for its custom chips business and move away from Marvell Technology , for example. A recent note from Benchmark suggested that Amazon may also be looking to switch to Broadcom and away from Marvell to develop future generations of its Trainium chips. Broadcom has also benefited from bullish sentiment toward Google’s Tensor Processing Units, or TPU, chips, which it has made for several years. Broadcom shares, up 74% this year, briefly fell as much as 4.5% ahead of the latest earnings, suggesting some investors were taking profits after the recent rally. Broadcom is higher by 60% in just the past six months. Yet analysts polled by LSEG have a consensus price target on Broadcom that implies virtually no upside over the next year. Still, 15 of the 49 analysts covering Broadcom rate it a strong buy, while 32 give it a buy and only two rate the stock a hold. JPMorgan’s Harlan Sur is one bullish analyst, recently calling Broadcom a top pick and reiterating an overweight investment opinion. The analyst sees “sustained strong AI fundamentals combined with aggressive synergy/value creation in the software business,” but his 12-month, $400 price target is a fraction below where the stock is currently trading. AVGO 1Y mountain Broadcom stock performance over the past year. Looking ahead, analysts at UBS and Jefferies expect strong guidance for Broadcom’s custom chips business, driven partly by momentum from Google’s latest TPU chip, Ironwood, and new customers such as OpenAI, which has a partnership with Broadcom to launch its first AI chip in 2026, according to a Financial Times report in early September. Analysts are betting OpenAI is the fourth “mystery” customer announced by Broadcom during its last quarterly results. Broadcom’s CEO said then that a large company placed orders for $10 billion worth of AI chips, which it calls eXtreme Processing Units, or XPUs. Some analysts think Meta Platforms could add another leg to the momentum in Broadcom’s custom chips business, given that the Mark Zuckerberg company is reportedly considering using Google’s TPUs in its own data centers. Take a look at what top Wall Street firms are saying about Broadcom’s latest quarter: UBS: Buy rating, $472 price target “We model AVGO’s AI business reaching $6.5B in Jan Q as custom compute continues to grow high teens Q/Q driven by the strong ramp of Ironwood … We think AVGO may use this opportunity to clarify the debate on AVGO’s “Customer 4” rack-scale program, and the company may also shine more light on the OpenAI partnership given its ramp is getting close. Finally, we expect AVGO to offer more detail on the Gross Margin impact of the “Customer 4″ and OpenAI rack-scale ramps,” analyst Timothy Arcuri said in a Nov. 30 note to clients. Deutsche Bank: Buy, $400 “Heading into AVGO’s F4Q report, we expect them to deliver a typical incremental beat/raise,” analyst Ross Seymore wrote in a Dec. 2 note. “More important than the near term dynamic is the co’s longer-term outlook on its XPU business, with AVGO expecting an acceleration of growth in FY26 due to an expansion from 3 to 4 XPU customers (maybe now 5 after the Open AI announcement…) and the recovery of its non-AI-related cyclical business (with its total backlog rising to $110b). Additionally, the proliferation of the TPU as a potential merchant processor sold by Google to hyperscale and neocloud customers presents a potentially expanding TAM opportunity for AVGO.” JPMorgan: Overweight, $400 “We expect the team to drive ~$20-21B+ (up 60% Y/Y) in AI revenues in FY25 on a continued strong ramp of Google’s TPU AI processor, continued ramp up of its other AI ASIC programs (e.g. Meta/ByteDance) and sustained demand for its AI networking products … Looking ahead, we expect the team to drive $50B+ in AI revenues in FY26 as new products/programs ramp (Meta MTIA 3nm ASIC program, upside shipments on current generation TPUv6 3nm – Ironwood, start of ramp of TPUv7 3nm, and Softbank/ARM and OpenAI 2nm/3nm ASICs) and the team’s next-gen Tomahawk 6 networking ramp,” analyst Harlan Sur said in a Dec. 5 note. “The non-AI semi business should continue to gradually improve on improving cyclical trends in broadband/storage/enterprise.” Jefferies: Buy, $480 “We return to AVGO as our top pick as we see the larger upside to estimates as ASICs hit an inflection point. Google has long been the main ASIC customer for AVGO but those volumes should become much more meaningful in C26/27,” analyst Blayne Curtis said in a Nov. 3 note. “Anthropic is planning to set up their own cluster as well in C26. Beyond the upside from GOOG, we expect Meta to ramp its first true AI chip (w/ HBM) in Q326 with an OAI ASIC in Q426. We expect the OAI engagement to drive more upside given the 10GWs plans through 2029.”
