Broadcom Inc. (NASDAQ:AVGO) is strengthening its position in the artificial intelligence chip market by securing critical supply chains and drawing bullish responses from Wall Street analysts after strong earnings and guidance.
Broadcom Locks In Key AI Chip Supply Through 2028
Broadcom said it has secured the high-bandwidth memory (HBM) and advanced-node manufacturing capacity at Taiwan Semiconductor Manufacturing Co. (NYSE:TSM) needed to support its AI chip production through 2028, easing concerns about potential supply shortages.
The company said it locked in the required volumes in advance as demand for AI infrastructure accelerates, helping address industry worries about limited HBM supply and constrained Taiwan Semiconductor production capacity, the Chosunbiz reported on Friday.
Broadcom has expanded rapidly in the application-specific integrated circuit (ASIC) market as major technology companies—including Alphabet Inc. (NASDAQ:GOOGL) Google, Meta Platforms Inc. (NASDAQ:META), Microsoft Corp. (NASDAQ:MSFT) and Amazon.com Inc. (NASDAQ:AMZN)—work with the company to build custom AI chips tailored to their own models instead of relying solely on GPUs from Nvidia Corp. (NASDAQ:NVDA) or Advanced Micro Devices, Inc. (NASDAQ:AMD).
Strong AI Growth Drives Revenue Outlook
CEO Hock Tan said Broadcom expects AI revenue from its chip business to exceed $100 billion next year.
The company also reported strong growth in its latest results, with fiscal first-quarter revenue reaching $19.31 billion, up 29% year over year, while AI revenue rose 106% to $8.4 billion.
Analysts Raise Price Forecasts After Earnings Beat
Analysts raised their price forecasts on Broadcom after the company beat first-quarter estimates and issued strong guidance driven by continued growth in AI.
JP Morgan analyst Harlan Sur reiterated an Overweight rating and lifted his price forecast to $500 from $475, citing strong momentum in Broadcom's AI segment and growing demand for AI networking, which he expects to account for 40% of AI revenue in the second quarter.
Sur said the performance could put Broadcom on track to generate more than $65 billion in AI revenue in fiscal 2026 and potentially over $100 billion in fiscal 2027.
Goldman Sachs analyst James Schneider maintained a Buy rating. He raised his price forecast to $480 from $450, citing management's guidance and commentary that point to strong long-term AI demand and improved visibility into future revenue.
Rosenblatt analyst Kevin Cassidy also maintained a Buy rating and raised his price forecast to $500, highlighting stronger visibility into 2027 demand and Broadcom's leadership in AI ASICs and networking.
Meanwhile, Benchmark analyst Cody Acree reiterated a Buy rating with a $485 price forecast, saying the company's guidance, expanding base of large platform customers, and secured supply chain strengthen confidence in Broadcom's AI growth outlook.
AVGO Price Action: Broadcom shares were down 0.50% at $331.10 during premarket trading on Friday, according to Benzinga Pro data.
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