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Investing.com - Wolfe Research has maintained its Peerperform rating on Broadcom Limited (NASDAQ:AVGO), a semiconductor giant with a $1.44 trillion market capitalization, according to a research note published this week.
The research firm highlighted that Broadcom has secured a fourth XPU customer expected to contribute significant revenue in the second half of 2026, driving analyst estimates higher for the semiconductor company.
Wolfe Research noted that the custom nature of this revenue makes it challenging to model, likely explaining why Broadcom management chose not to update their fiscal year 2027 outlook.
The research note suggests this development validates the view that XPU technology is gaining market share from a small base relative to GPU, with Broadcom positioned as the main beneficiary of this trend.
Wolfe Research pointed to sustainability questions given the "inherently lumpy nature of custom revenue" and valuation concerns, noting that Broadcom currently trades at 34 times fiscal year 2026 earnings estimates, representing approximately a 7-turn premium compared to Nvidia. According to InvestingPro analysis, the stock appears overvalued at current levels, with 18 additional key insights available to subscribers through their comprehensive Pro Research Report.
In other recent news, Broadcom Inc. reported strong earnings for the third quarter of 2025, surpassing analysts’ expectations. The company achieved an earnings per share of $1.69, slightly above the forecasted $1.66, while revenue reached $16 billion, exceeding the anticipated $15.82 billion. This robust performance indicates strong investor confidence in Broadcom’s financial health and future prospects. Additionally, BofA Securities and Barclays both raised their price targets for Broadcom to $400, maintaining a Buy and Overweight rating, respectively. BofA Securities highlighted accelerated growth in Broadcom’s custom AI chip business as a key factor. Barclays noted the addition of a new ASIC customer, expected to contribute significantly in the latter half of fiscal year 2026. These developments underscore Broadcom’s expanding influence in the AI sector. The company’s continued growth and strategic partnerships are drawing positive attention from analysts and investors alike.
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