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Investing.com - Oppenheimer has reiterated an Outperform rating on Broadcom Limited (NASDAQ:AVGO), a semiconductor giant with a $1.68 trillion market cap, with a price target of $360.00 following the announcement of a strategic partnership with OpenAI. According to InvestingPro data, 26 analysts have recently revised their earnings estimates upward, reflecting growing confidence in the company’s prospects.
Broadcom and OpenAI announced Monday they will deploy 10GW DC infrastructure through a partnership that will run from the second half of 2026 through 2029. Unlike other recent OpenAI deals, Broadcom did not invest in OpenAI or issue warrants as part of the agreement. The company, which maintains impressive gross profit margins of 77.19% and achieved 28.01% revenue growth in the last twelve months, appears well-positioned to execute this strategic initiative.
The companies will co-develop AI systems featuring custom AI XPU accelerators and Ethernet networking capabilities designed for inference workloads. OpenAI CEO Sam Altman emphasized the systems would deliver improved performance and power efficiency, though specific revenue details per gigawatt were not disclosed. For deeper insights into Broadcom’s financial health and growth potential, including exclusive analyst coverage and Fair Value estimates, check out the comprehensive research available on InvestingPro.
Oppenheimer estimates Broadcom’s content per gigawatt could exceed $15 billion. The partnership follows approximately 18 months of collaboration between the two companies.
Separately, Broadcom President of Semiconductor Solutions Charlie Kawwas clarified on CNBC that the previously announced $10 billion custom AI XPU win from September 9, scheduled to ship in fiscal third and fourth quarters, is not related to OpenAI.
In other recent news, Broadcom has made significant strides with its strategic collaboration with OpenAI, which has led to several analyst firms revising their outlooks for the company. Mizuho raised its price target for Broadcom to $430, citing the potential financial impact of OpenAI’s custom ASIC partnership, which could be worth between $150-200 billion over multiple years. Deutsche Bank also increased its price target to $400, following Broadcom’s announcement of deploying approximately 10 gigawatts of accelerators and network systems for AI clusters. UBS adjusted its price target to $415, reflecting increased estimates due to AI demand and supply chain checks. Meanwhile, Bernstein reiterated an Outperform rating, highlighting potential earnings revisions driven by AI revenue growth, despite some concerns about margins. CFRA praised Broadcom’s partnership with OpenAI, noting the "extraordinary" visibility and pipeline it provides. These developments underscore Broadcom’s growing involvement in the AI sector and its potential implications for future earnings.
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