Broadcom Is Up More Than 25X in 10 Years. Can AI Drive the Next Chapter?

The 24/7 Wall St. price target for Broadcom (NASDAQ:AVGO | AVGO Price Prediction) is $423.79. From a reference price of $351.19, that means 20.67% upside over 12 months. Our model rates the stock a buy, and its confidence is high.

Ten years ago Broadcom traded at a split-adjusted $13.42. Today it trades at $348.17, a 2,493.52% gain, or about 26x. Custom AI chips are now doing most of the work. Management expects AI semiconductor revenue to reach about $115 billion in fiscal 2027 and $230 billion in fiscal 2028.

Record Results Followed by a Pullback Leave Broadcom 29% Below Its High

The stock is down 1.92% over the past week and 5.82% over the past month. It is up only 1.15% year to date. It closed at $393.94 in mid-June. The stock is 29% below the 52-week high of $493.28 and 20% above the low of $288.95.

The selloff came after a strong quarter. Fiscal Q3 revenue rose 85.5% to $29.591 billion, ahead of the $29.44 billion estimate. Non-GAAP EPS of $3.32 beat the $3.24 consensus. AI semiconductor revenue rose 221% to $16.70 billion.

For Q4, management guided to $34.8 billion in revenue. Today, Barron’s reported that Broadcom and Anthropic are becoming more intertwined.

Why Bulls See $532 Within Reach

Hock Tan said Broadcom is “very much on target to exceed $30 in earnings per share in fiscal 2028.” Six XPU customers are speeding up adoption, and Google has signed a long-term agreement for future TPUs.

Management also expects AI networking to “grow just as fast as XPUs.” Of 49 analysts, 45 rate the stock a Buy or higher. Our bull case reaches $532.91.

Supply Bottlenecks and Customer Concentration Could Cap Gains

Management named wafers, substrates, HBM memory and data center power as constraints. A small group of hyperscalers drives most of the AI revenue. Gross margin slipped 210 basis points to 75%, and fixed-rate debt amounts $59.6 billion.

That said, the margin drop reflects a greater mix of XPU sales, and operating margin hit a record 68%. Our bear case is $374.67, which still remains above today’s price.

Broadcom Trades at a Discount to NVIDIA and Marvell

NVIDIA (NASDAQ:NVDA) belongs here because its GPUs are what Broadcom’s XPUs replace. NVIDIA trades at 25x forward earnings with 105.9% revenue growth.

The closest custom-silicon rival is Marvell Technology (NASDAQ:MRVL). That stock trades at 62x forward earnings while growing revenue 36.5%. Broadcom trades at 19x with 85.5% growth. Compared with these peers, our target looks conservative.

Our Model Still Favors Broadcom at 19x Forward Earnings

The 24/7 Wall St. price target of $423.79 has a buy rating with 90% confidence. What tips the scale is valuation: Broadcom trades at a discount to its peers despite growth that is speeding up.

I’d find the stock compelling if Broadcom secures enough supply to meet its fiscal 2027 AI outlook. I’d be more cautious if a major XPU customer slows its spending. On balance, I think the reward outweighs the risk.

Looking further out, here is where our model’s base case projects Broadcom could trade.

Broadcom would need to keep executing on its custom-silicon strategy for these projections to hold. Supply constraints or a slowdown in AI spending could drive results well above or below these levels. We cataloged in a free playbook on spotting the next Nvidia the same traits that appeared in the biggest tech winners long before their major runs.

Contact [email protected] for any questions or corrections.