One Stock Could Benefit as AI Spending Moves Beyond Nvidia

For two years, investors treated AI chips as a one-company story. Fresh results from Broadcom (NASDAQ:AVGO | AVGO Price Prediction) show the money now flowing into custom accelerators (XPUs) and the networking silicon that links them.

Broadcom last closed at $361.54. Our 24/7 Wall St. price target is $429.85 for the next 12 months, which implies 18.89% upside.

24/7 Wall St. Price Target Summary

Our confidence is high. Analyst support is close to solid, and earnings are growing fast enough to justify a higher price. Shares changed hands at $356.88 at noon Monday, down 1.29%.

Record AI Revenue Runs Into an AI Credit Scare

The stock has gone nowhere lately even as the business has taken off. Shares are up 0.49% over the past week, down 1.88% over the past month and up only 3.68% year to date. That leaves them between a 52-week high of $493.28 and a low of $288.95.

Recent selling tracks concerns over AI-related borrowing, which MarketWatch described as a credit scare hitting Broadcom and Oracle.

Fundamentals are speeding up. Fiscal Q3 revenue came in at $29.59 billion, up 85.5% and ahead of the $29.44 billion consensus. Non-GAAP EPS of $3.32 beat estimates of $3.24, the 9th straight beat.

AI semiconductor revenue rose 221% to $16.70 billion. For Q4, management guided to $21.7 billion in AI revenue on total revenue of about $34.8 billion.

Why Bulls See $535 and Beyond

Order flow is running far ahead of shipments. On the fiscal Q2 call, management reported AI bookings of over $30 billion and said “our visibility runs all the way to 2028 right now.” Broadcom repeated AI revenue of in excess of $100 billion for fiscal 2027.

That rests on Google TPU programs, an OpenAI deal for 10 gigawatts by 2029 and a Meta Platforms (NASDAQ:META) commitment of 3 gigawatts through the end of 2028. Wall Street’s consensus target is $531.31, from 7 Strong Buy, 40 Buy and 3 Hold ratings, with no Sells. The bull case reaches $535.84.

What Could Derail the Rally

Customer concentration is the biggest risk. The chief executive said most demand “comes from those few large frontier model developers.” As lower-margin TPU and ASIC sales grow as a share of revenue, semiconductor margins could come under pressure. Management responded that AI networking carries “very rich margins.”

Debt from the VMware deal is another concern, with total liabilities at $88.46 billion. Cash generation offsets much of that worry. Quarterly free cash flow came to $13.66 billion, or 46% of revenue. Our bear case of $378.91 still sits above Friday’s close.

Broadcom Trades Cheaper Than NVIDIA and Marvell

The merchant GPU leader that hyperscalers are designing custom chips to complement is NVIDIA (NASDAQ:NVDA). Shares trade at 25x forward earnings on quarterly revenue growth of 105.9%.

Marvell Technology (NASDAQ:MRVL) competes directly in custom ASICs and optical interconnects. The stock trades at 62x forward earnings while growing revenue 36.5%.

At our target, Broadcom would trade at about 23x forward EPS of $18.373, which is still below both peers. Against this group, the 24/7 Wall St. price target looks conservative.

Why Our Model Rates Broadcom a Buy

Our 24/7 Wall St. price target of $429.85 comes with a buy rating and 90% confidence. Booked AI demand reaching into 2028, coupled with a discount to its peers, is what tips the balance (we reverse-engineered what the biggest tech winners looked like early and turned it into a free playbook here: The Next Nvidia Playbook).

Keep an eye on whether Q4 AI revenue hits the $21.7 billion guide. A key risk to monitor is whether the credit worries lead hyperscalers to delay orders.

These projections assume Broadcom keeps executing on its XPU and networking roadmap. Reaching the $100 billion AI goal could drove results higher, while losing a major customer could pull them lower.

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