Jefferies Tells NVIDIA to Step Aside, Picks Broadcom as Top Semiconductor Stock

Semiconductor giant Broadcom (NASDAQ: AVGO) has had a very strong 2025.

As of the Nov. 13 close, shares have provided a total return of 47% on the year. This handily beats out the 16% return of the S&P 500 Index.

Broadcom is also outperforming the semiconductor industry, as evidenced by the iShares Semiconductor ETF's (NASDAQ: SOXX) 35% return.

Amid its impressive run, Broadcom has garnered a bevy of optimistic price target forecasts from Wall Street analysts, including a new bullish call from Jefferies. The firm not only named Broadcom its top semiconductor pick but also issued the stock’s highest price target to date. Here’s why Jefferies sees even more upside ahead.

Top Semiconductor Pick: Jefferies Replaces NVIDIA With Broadcom

Jefferies recently issued a staggering $480 price target on Broadcom, suggesting that Broadcom shares could rise by around 41% from their Nov. 13 closing price of just under $340.

This is currently the highest price target an analyst has on Broadcom. It moderately exceeds KeyCorp’s $460 target, which was the most lofty forecast placed on Broadcom before.

Notably, Broadcom replaced NVIDIA (NASDAQ: NVDA) as Jefferies’s top semiconductor pick. This is because the firm believes that application-specific integrated circuits (ASICs) are at an “inflection point.” ASICs are custom-designed chips, typically made for a specific buyer. Sales of artificial intelligence (AI) ASICs have been the central driver of Broadcom’s success recently.

Interestingly, Jefferies is one of the few analysts who see more upside potential in Broadcom than NVIDIA. Its $240 NVIDIA target implies around 29% upside. Meanwhile, based on MarketBeat consensus targets, analysts generally see more upside in NVIDIA.

NVIDIA’s consensus target indicates shares could gain 27%, while Broadcom’s only suggests around 10% upside. Clearly, Jefferies feels comfortable bucking the consensus, predicting that Broadcom will outperform Big Green. Now, let's dive into Jefferies' reasoning behind this decision.

Google’s Growing TPU Demand Could Supercharge Broadcom Revenue

Jefferies believes that Alphabet's (NASDAQ: GOOGL) subsidiary, Google, will drive massive demand for Broadcom’s ASICs in 2026. Broadcom is Google’s design partner for its Tensor Processing Units (TPUs). Jefferies says that TPU volumes will “climb sharply, with 2026 nearing 3 million units." The more TPUs Google demands, the more revenue Broadcom generates due to its partnership.

MarketBeat pointed out at the end of October that higher TPU volumes from Google were a distinct possibility, adding upside potential to Broadcom shares. Jefferies' report adds considerable weight to this suspicion.

However, investors don’t need to take Jefferies' word for it.

Google’s recent press release strongly suggests that it will be buying more TPUs. On Nov. 6, the company announced that its next-generation Ironwood TPUs will be generally available in the coming weeks. This means that Google will allow cloud customers to access Ironwood to support their AI workloads.

In the past, Google has said that it primarily uses TPUs for its internal AI workloads. Now, Google seems to be increasing its focus on offering TPUs to other companies as a service. With Google still needing to use TPUs internally, supporting increased external demand will require it to buy more TPUs overall. That’s money going into Broadcom’s pockets.

Jefferies: Broadcom Revenue Could Hit $130 Billion by 2027

Jefferies forecasts that Broadcom’s revenue will increase to $100 billion in 2026 and $130 billion in 2027.

If Broadcom meets its Q4 guidance of $17.4 billion in revenue, its total revenue in 2025 would be around $63 billion, implying 59% revenue growth in 2026 and 30% in 2027. This would be a massive acceleration from the approximately 23% growth Broadcom is guiding for in 2025. Achieving this level of growth in 2026 would be a huge accomplishment, as the firm’s revenue growth hasn’t surpassed 59% since 2016.

Overall, Jefferies’ outlook is undoubtedly on the lofty side of forecasts. However, this projection aligns with the fact that Jefferies’ Broadcom price target is the most bullish among analysts.

Whether Broadcom truly represents a better chip play than NVIDIA is up for debate. It will be interesting to see if more analysts coalesce around Jefferies’ view going forward. Regardless, the signals around Broadcom continue to be strong, supporting the stock’s positive outlook.

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The article "Jefferies Tells NVIDIA to Step Aside, Picks Broadcom as Top Semiconductor Stock" first appeared on MarketBeat.