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Investing.com - KeyBanc Capital Markets has raised its price target on Broadcom Limited (NASDAQ:AVGO) to $420.00 from $400.00 while maintaining an Overweight rating on the semiconductor company’s stock. The company, currently valued at $1.55 trillion, maintains a "GREAT" financial health score according to InvestingPro data, with 26 analysts recently revising their earnings estimates upward.
The revised outlook stems from significant upward revisions in CoWoS (Chip on Wafer on Substrate) supply for 2026, which KeyBanc projects will reach 190,000 units, representing over a 160% year-over-year increase. This supply expansion is primarily driven by Broadcom maintaining 100% share of Google’s Tensor Processing Unit (TPU) franchise through 2026 due to delays in MediaTek’s TPU7e. The company’s strong market position is reflected in its impressive 77.19% gross profit margins and 28.01% revenue growth over the last twelve months.
KeyBanc noted that TPU shipments are expected to more than double in 2026 as Google looks to make its TPU more broadly available for various workloads, further strengthening Broadcom’s position in the AI chip market.
The firm also highlighted upcoming artificial intelligence application-specific integrated circuit (AI ASIC) production, with OpenAI expected to ramp up its AI ASIC in the second half of 2026 with volumes estimated between 400,000 and 500,000 units.
Apple is similarly expected to begin ramping its AI ASIC next year with volumes estimated at approximately 100,000 units, adding another growth vector to Broadcom’s expanding AI chip business.
In other recent news, Broadcom Inc. announced a $5 billion senior notes offering, which includes $1 billion of 4.200% senior notes due 2030, $2.25 billion of 4.800% senior notes due 2036, and $1.75 billion of 4.900% senior notes due 2038. This financial move is part of Broadcom’s strategy to manage its financial obligations, with the notes being unsecured and unsubordinated. Additionally, Fitch Ratings upgraded Broadcom to ’BBB+’ from ’BBB’, citing the company’s focus on AI semiconductor growth as a key factor. Moody’s also upgraded Broadcom’s senior unsecured rating to A3, highlighting the strengthening business profile driven by AI semiconductor revenue growth. S&P Global Ratings followed suit, upgrading Broadcom to ’A-’ due to stronger-than-anticipated growth in AI, noting that AI semiconductor revenues now account for a significant portion of Broadcom’s sales. Furthermore, Broadcom has expanded its partnership with Lloyds Banking Group to enhance the bank’s technology infrastructure using VMware Cloud Foundation and Broadcom’s mainframe solutions. These developments reflect Broadcom’s strategic focus on AI and its growing influence in the semiconductor industry.
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