Macquarie initiates Broadcom stock with Outperform rating on AI growth

Investing.com - Macquarie initiated coverage on Broadcom Limited (NASDAQ:AVGO), a semiconductor giant with a $1.7 trillion market cap, with an Outperform rating and a $420.00 price target on Monday. The company has demonstrated impressive financial performance, with revenue growing 28% year-over-year and maintaining strong gross profit margins of 77%.

The research firm cited Broadcom’s strong position in the ASIC (Application-Specific Integrated Circuit) market, which it notes is growing faster than the GPU market due to increasing adoption among hyperscalers and vertical AI markets.

Macquarie highlighted that Broadcom maintains a near-monopoly in AI and cloud networking ASIC, positioning the company to benefit significantly as the industry evolves.

The firm expects rising AI model complexity to boost Broadcom’s silicon content per rack, creating additional revenue opportunities for the company.

Macquarie’s price target of $420.00 represents an implied 17% total shareholder return potential for Broadcom investors.

In other recent news, Broadcom Limited has seen several analysts raise their price targets following the company’s strong earnings report. Mizuho increased its price target to $410, citing Broadcom’s enhanced AI revenue outlook for fiscal 2026 and beyond. CFRA also adjusted its target to $380, highlighting the company’s expanding AI semiconductor business and the addition of a fourth customer expected to contribute significantly to sales. Truist Securities raised its price target to $365 after noting a significant increase in Broadcom’s AI infrastructure backlog. TD Cowen set a new target of $370, attributing the increase to Broadcom’s robust results and guidance, particularly in the tensor processing unit business.

Additionally, Celestica has been identified by BMO Capital Markets as a key supplier for OpenAI’s custom servers, which use Broadcom silicon. This development is seen as beneficial for Celestica , as Broadcom is reportedly collaborating with OpenAI to design AI chips. These recent developments underscore the growing importance of AI in Broadcom’s business strategy and its impact on related companies like Celestica.

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