Key insights
- Mizuho reiterated an Outperform rating on Broadcom, citing growth in its AI chip pipeline, including deals with Anthropic and Meta. The firm highlights Broadcom's strength in AI networking and expects VMware software to contribute significantly to free cash flow. This positive outlook on a major semiconductor player suggests continued investment in AI infrastructure, potentially boosting the broader tech sector and US equities.
Investing.com - Mizuho reiterated an Outperform rating and $480.00 price target on Broadcom Limited (NASDAQ:AVGO) following an investor call with company executives. The stock currently trades at $398.47, up 135% over the past year, though InvestingPro analysis suggests the shares may be overvalued at current levels.
The firm hosted Broadcom CEO Hock Tan, CFO Kirsten Spears, and Head of Investor Relations Ji Yoo for discussions with investors. The call covered the company’s custom chip pipeline, networking products, and software business.
Mizuho highlighted an expanding ASIC pipeline including TPUs, Anthropic, MTIA, and OpenAI across multiple generations and multi-gigawatt deployments. The firm noted a 3.5-gigawatt Anthropic deal starting in calendar year 2027, which it believes involves only TPU v8 initially, with potential for additional business as subsequent TPU generations ramp.
The firm pointed to AI networking strength in copper products potentially extending into 3.2T/6.4T for short-reach NVL72 racks as Broadcom works with 400G/800G SerDes. Mizuho expects continued hybrid growth with copper-optical short and long-reach interconnects.
Mizuho said VMware infrastructure software could stabilize at high single-digit to 10% year-over-year growth over the long term at approximately 80% operating margin, supporting annual free cash flow above $54 billion. For deeper insights into Broadcom’s valuation and growth prospects, investors can access the comprehensive Pro Research Report, available for this and 1,400+ other US equities.
In other recent news, Broadcom has announced a significant multi-year partnership with Meta Platforms to develop AI compute accelerator chips through 2029. This collaboration focuses on Meta’s Training and Inference Accelerator (MTIA) chips, with Broadcom providing technology based on its XPU platform. The initial deployment exceeds one gigawatt of computing capacity, with plans for multi-gigawatt expansion. In addition, Broadcom introduced a new AI agent runtime environment for the VMware Tanzu Platform, designed for autonomous AI applications, at the AI in Finance Summit. This system offers governance and operational controls for AI agents managing software execution and decision-making.
Benchmark has maintained its Buy rating and set a $485 price target for Broadcom, citing confidence in the company’s ability to exceed its AI semiconductor revenue targets by 2027. Similarly, Bernstein SocGen Group reiterated an Outperform rating with a $525 price target, highlighting the strategic partnership with Meta. Goldman Sachs also reiterated its Conviction Buy rating with a $480 price target, emphasizing the partnership’s long-term supply chain fulfillment plans extending to 2029. These developments reflect Broadcom’s ongoing strategic initiatives and partnerships in the AI sector.
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