EOG Resources completes $5.6 billion acquisition of Encino Acquisition Partners
Investing.com - HSBC upgraded Broadcom Limited (NASDAQ:AVGO) from Hold to Buy on Tuesday, setting a price target of $400.00 as the firm sees significant growth potential in the company’s ASIC business. According to InvestingPro analysis, Broadcom is currently undervalued, with strong financial metrics supporting its growth trajectory.
The upgrade follows HSBC’s June 6 note which highlighted increasing confidence in Broadcom’s fiscal year 2026 ASIC revenue growth, reflected in sell-side consensus estimates being raised by 23% for FY26 and 28% for FY27 after the company’s second-quarter earnings call. This aligns with Broadcom’s impressive revenue growth of 7.8% year-over-year and a robust gross margin of 74.3%.
HSBC believes Broadcom’s ASIC revenue potential remains undervalued as hyperscaler AI server capital expenditure allocation toward ASIC projects is expected to increase from 2% in FY23 to 14% in FY27, with industry ASIC revenue projected to grow at a compound annual growth rate of 96% compared to 47% for AI GPUs from 2023 to 2027. Want deeper insights into Broadcom’s growth potential? InvestingPro subscribers have access to over 30 additional ProTips and comprehensive financial metrics.
The firm expects ASIC projects to move toward larger die sizes, resulting in higher pricing premiums, with ASIC blended average selling prices forecast to increase 92% year-over-year in FY26 and another 25% in FY27.
HSBC has revised its ASIC revenue estimates for Broadcom upward by 58% for FY26 and 96% for FY27 to $28.4 billion and $42.8 billion respectively, which are 42% and 69% higher than consensus estimates of $19.9 billion and $25.3 billion.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.