Broadcom stock price target raised to $415 from $365 at UBS on AI demand

Investing.com - UBS raised its price target on Broadcom Limited (NASDAQ:AVGO) to $415 from $365 on Tuesday, while maintaining a Buy rating on the stock. The semiconductor giant, currently valued at $1.68 trillion, has seen its stock surge nearly 98% over the past year. According to InvestingPro data, the company maintains an impressive gross profit margin of 77.19%.

The price target increase follows an announcement from OpenAI and reflects UBS’s updated model with increased estimates based on this development and other supply chain checks. This optimism aligns with broader analyst sentiment, as InvestingPro reveals 26 analysts have recently revised their earnings estimates upward, with the overall consensus being strongly bullish.

UBS believes that while consensus earnings per share estimates have caught up to what it views as approximately $10 reality for calendar year 2026, the mega-scale deployments driving Broadcom’s business are likely to be back-end loaded due to infrastructure deployment timelines.

The investment firm projects Broadcom’s earnings per share to reach approximately $13.50 in calendar year 2027, about 10% above Street estimates, and approximately $17.50 in calendar year 2028, with visibility to potentially exceed $20 once projects fully deploy.

UBS maintains its view that Broadcom stock should continue to have an upside bias despite the current setup not appearing ideal on the surface.

In other recent news, Broadcom has announced a strategic collaboration with OpenAI, which involves deploying approximately 10 gigawatts of accelerators and network systems for next-generation AI clusters. This partnership is expected to begin its deployment in the second half of 2026 and continue through the end of 2029. Analysts have responded positively, with Deutsche Bank raising its price target for Broadcom to $400, maintaining a Buy rating, and Mizuho increasing its target to $430 while reiterating an Outperform rating. Mizuho estimates that the OpenAI partnership could potentially be worth $150-200 billion for Broadcom over multiple years.

Bernstein has also reiterated an Outperform rating on Broadcom, highlighting the potential for positive earnings revisions driven by artificial intelligence revenue growth. Despite concerns about margin adjustments due to AI buildout, Bernstein does not expect a significant decline in gross margins. Additionally, CFRA has praised Broadcom’s "extraordinary" visibility and pipeline as a result of the multi-year partnership with OpenAI. Meanwhile, Wolfe Research has maintained a Peerperform rating on Broadcom, noting the company’s provision of Ethernet-based solutions for scale-up and scale-out capabilities in the OpenAI deal.

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