Broadcom stock gains as BofA reiterates Buy rating on AI momentum

Investing.com - Broadcom Limited (NASDAQ:AVGO) stock is in focus after BofA Securities reiterated its Buy rating and $400.00 price target on the semiconductor company. The semiconductor sector remains highly competitive, with key player NVIDIA currently trading near its 52-week high and showing remarkable revenue growth of 71.5% over the last twelve months.

BofA’s analysis highlights that Broadcom’s previously announced $10 billion award for fiscal third quarter 2026 was not for OpenAI but likely for another customer such as Anthropic, xAI, or Apple, indicating customer diversification in Broadcom’s artificial intelligence business. For deeper insights into the AI semiconductor landscape, InvestingPro subscribers can access comprehensive analysis of major players like NVIDIA, which currently maintains an excellent financial health score and shows strong profitability metrics.

The firm notes Broadcom appears more confident in offering rack-scale solutions to customers, which, while carrying lower margins, represent potentially double the content opportunity compared to current XPU offerings.

BofA emphasized that OpenAI’s endorsement strengthens Broadcom’s position in custom chips against competitors NVIDIA and AMD.

While maintaining current estimates, BofA sees potential upside to its Broadcom fiscal 2026/2027 AI revenue forecasts of $41 billion/$68 billion, which already exceed consensus estimates of $38 billion/$52 billion, and suggests the company could potentially reach $100 billion in AI sales by fiscal 2028 versus consensus of $78 billion.

In other recent news, NVIDIA has announced that Meta and Oracle will adopt its Spectrum-X Ethernet networking switches to enhance their AI data centers. Meta plans to integrate these switches into its Facebook Open Switching System, aiming to improve AI training efficiency. Meanwhile, Oracle intends to utilize the Spectrum-X switches to build giga-scale AI supercomputers. In related developments, Mizuho has raised its price target for NVIDIA to $225, citing the company’s leadership position in the AI market. Similarly, Cantor Fitzgerald increased its price target to $300, following discussions with NVIDIA executives about the company’s AI infrastructure strategy.

Additionally, a Singaporean firm with ties to NVIDIA CEO Jensen Huang is under investigation by the U.S. Commerce Department for potential violations of export restrictions to China. The firm, Megaspeed, is being scrutinized for allegedly helping Chinese companies bypass U.S. export controls. These developments highlight NVIDIA’s significant role in the AI sector and ongoing scrutiny related to international trade regulations.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.