Evercore ISI raises Broadcom stock price target to $403 on OpenAI deal

Investing.com - Evercore ISI has raised its price target on Broadcom Limited (NASDAQ:AVGO), a prominent player in the Semiconductors industry with a market cap of $1.69 trillion, to $403.00 from $342.00 while maintaining an Outperform rating. According to InvestingPro data, the company maintains impressive gross profit margins of 77.19%.

The price target increase follows Broadcom’s recently announced deal with OpenAI to deploy 10GW of custom AI accelerators by the end of 2029, which Evercore believes could add between $2 and $6 to its current 2029 EPS estimate.

Evercore noted that OpenAI appears to be separate from the unnamed fourth customer that previously placed a $10 billion order for delivery beginning in the second half of fiscal year 2026.

According to Evercore, Broadcom’s XPUs and Ethernet-based solutions will be used for OpenAI’s inferencing applications, further cementing the company’s position as a premier supplier of custom-AI XPUs.

The new price target is based on a 38x multiple of Evercore’s 2029 EPS power estimate of $14, discounted back three years, with the firm planning to update its model following Broadcom’s upcoming earnings call.

In other recent news, Broadcom Inc. announced the launch of its Thor Ultra, the industry’s first 800G AI Ethernet Network Interface Card designed to enhance AI workloads by interconnecting large-scale XPU clusters. This new NIC introduces several innovations, including packet-level multipathing and programmable congestion control algorithms. In a strategic move, Broadcom has partnered with OpenAI to deploy 10 gigawatts of DC infrastructure from the latter half of 2026 through 2029, although Broadcom did not invest in OpenAI as part of this agreement.

Analysts have responded positively to these developments. Oppenheimer reiterated an Outperform rating for Broadcom, maintaining a price target of $360. UBS raised its price target to $415, citing increased estimates due to the OpenAI partnership and supply chain insights. Bernstein also reiterated an Outperform rating with a $400 price target, noting the potential for positive earnings revisions driven by AI revenue growth. Similarly, Deutsche Bank increased its price target to $400, maintaining a Buy rating, following the strategic collaboration with OpenAI.

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