Goldman Sachs Reiterates Buy Rating on Broadcom (AVGO) Stock

Broadcom Inc. (NASDAQ:AVGO) is one of the Most Promising AI Stocks to Buy Right Now. On October 13, analyst James Schneider of Goldman Sachs reiterated a “Buy” rating on the company’s stock, boosting the price objective to $380.00. The analyst’s rating is backed by a combination of factors, mainly revolving around Broadcom Inc. (NASDAQ:AVGO)’s strategic partnership with OpenAI. The analyst highlighted that this collaboration is set to deploy 10GW of custom-designed AI accelerators and networking products, cementing Broadcom Inc. (NASDAQ:AVGO)’s leadership in custom silicon technology.

As per the analyst, the partnership, which includes co-development of systems with Broadcom Inc. (NASDAQ:AVGO)’s accelerators and Ethernet solutions, is anticipated to begin deployments in H2 2026 and complete by 2029 end. The partnership not only reaffirms Broadcom Inc. (NASDAQ:AVGO)’s robust technology position compared to the competitors, but also provides a significant revenue opportunity, added Schneider. Furthermore, the analyst believes that the potential for substantial financial returns, along with industry-leading margins, can fuel stock price outperformance and offer healthy visibility into FY 2026 and FY 2027.

Polen Capital, an investment management company, released its Q3 2025 investor letter. Here is what the fund said:

“In early August we initiated positions in both NVIDIA and Broadcom Inc. (NASDAQ:AVGO), after having not owned either company over the past 2½ years following the initial wave of enthusiasm around Gen AI. While we have long admired both companies, their highly cyclical business models have made it extremely difficult to forecast future earnings growth with any degree of conviction. Given our approach of seeking durable and persistent earnings growth that compounds over long holding periods, our concern in holding either was that we would be forced to endure a punishing downcycle within our typical holding period – there is very little room that in a concentrated portfolio of 20-30 companies. In fact, pre ChatGPT, NVIDIA had two punishing down cycles over the preceding five years.

That is specifically what has occurred for NVIDIA and Broadcom. While the sheer magnitude of demand for AI chips, servers and networking equipment was something that we clearly underappreciated, new incremental data points over the past few months lead us to conclude the current boom in AI chips and related hardware will likely continue for the foreseeable future giving us greater conviction over the trajectory of future earnings for both NVIDIA and Broadcom.

Broadcom is the other major player in the AI chip market, the number one provider of custom chips, and currently receives the majority of the remaining 10c of every dollar being spent by enterprises. As Gen AI use cases mature, and as inference workloads become a bigger piece of the compute pie, we expect that custom chips (and Broadcom’s in particular) will account for a larger share of the total market. …” (Click here to read the full text)

While we acknowledge the potential of AVGO as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.