One Expert Sees Broadcom at $630 — and the AI Infrastructure Math Backs the Case

Shares of Broadcom (NASDAQ:AVGO | AVGO Price Prediction) have been fluctuating sideways since melting up for the month of April. And while the name is far less heated than many of its peers in the semiconductor scene, gaining just over 19% year to date, far less than the more than 71% surge in the iShares Semiconductor ETF (NASDAQ:SOXX), I still think the name might be turning into a bit of a relative catch-up trade for investors seeking less heat in the semis after the latest explosive leg higher.

Broadcom shares have been hot, but lukewarm when compared to the semi cohort

Of course, it’s hard to knock a 19% gain in just under six months, especially since that’s more than double what the broad S&P 500 has returned. Still, custom silicon stands out as a great place to be as AI inference turns things up a few notches as agentic AI looks to hit the mainstream. Undoubtedly, the concept of agents running around the clock could certainly pave the way for extreme levels of token consumption.

And as firms increasingly invest heavily to build their own ASICs (application-specific integrated circuits) for fine-tuned efficiencies, questions linger as to whether the valuation still makes sense to pick up the likes of a Broadcom or if the name is just headed for a sell-the-news kind of scenario as investors set the expectations bar so high than not even knockout quarters are enough to garner a sustained rally to higher levels.

Of course, it’s too early to tell if Broadcom will run into a bit of a ceiling, like Nvidia, that won’t be passed for some number of quarters. Either way, I do think the Street-high price target of $630 per share leaves room for optimism. While it’s no mystery that some of the big hyperscalers (and beyond) are going for silicon sovereignty, I still think the extent might leave runway for Broadcom even after nearly tripling in the past two years alone.

A $630 target is more than realistic

According to one bullish analyst over at Robert W. Baird, who holds the $630 target (that comes out to a 52% gain), Broadcom still has significant revenue and earnings per share upside through 2030. Add the VMWare growth engine and dominance in ASICs into the equation, and it’s hard to argue against such another major leg higher in the stock.

Of course, the latest OpenAI chip dean financing uncertainties might be a source of further near-term volatility. But, for the most part, I wouldn’t make too much of such a news item, especially since the long-term narrative seems as strong as ever.

As analysts revisit the drawing board to revise their price targets to the upside, perhaps that Street-high will look more like a base case than a bull case as the inference inflection point looks to hit. With the 2nm process up ahead, Broadcom is surely going to be busy, as it helps firms go after the greater efficiency gains in the next era.

As a premier custom silicon enabler, perhaps it’s more than worth paying a heftier price of admission, given the high chance the firm comfortably grows into its multiple over the next three to four years. At 37.17 times forward price-to-earnings (P/E), the name is starting to get up there in price, at least historically speaking, but I still think the multiple is well worth paying given the drivers and the potential for a token explosion, which may still be underrated by much of Wall Street.

The bottom line

At the end of the day, data centers are going up from left, right, and center, all while the next generation of AI applications and agents (some of which are 24/7) look to come online. All of these points point to an exponential curve, which, I still think, might not be fully priced into a semi-giant like Broadcom. In other words, perhaps Broadcom’s higher ticket price could prove a bargain if the potential growth curve that lies ahead.