Broadcom (AVGO) Stock: Named Jefferies Top Pick as Firm Raises Price Target to $480

TLDR

• Jefferies named Broadcom its new Top Pick and raised the price target to $480 from $415
• Broadcom signed a 10 gigawatt AI chip deal with OpenAI that could generate $150-200 billion in revenue
• The stock gained 12% in October following the OpenAI announcement
• Analysts project Broadcom’s revenue reaching $130 billion by 2027 from custom AI chip demand
• Google’s TPU volumes expected to hit 3 million units in 2026 with Anthropic ordering 250,000 units

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Jefferies elevated Broadcom to its Top Pick position and designated it as a Franchise Pick. The firm raised its price target to $480 from $415.

Analysts said the chipmaker stands at an inflection point. Custom AI chip demand from major tech companies is accelerating faster than expected.

Broadcom Inc., AVGO

The research team, led by Blayne Curtis, pointed to Broadcom’s Application-Specific Integrated Circuit business as the key growth driver. Google, Meta, and OpenAI are all ramping their own AI accelerators.

Broadcom announced a collaboration with OpenAI on October 13. The deal covers custom AI accelerators consuming 10 gigawatts of power.

OpenAI will design the chips and systems. Broadcom will provide Ethernet and connectivity solutions while helping with development and deployment.

Some analysts estimate the OpenAI deal could generate between $150 billion and $200 billion in revenue for Broadcom. First systems are expected to deploy in the second half of 2026.

The full 10 gigawatts of capacity should be online by the end of 2029. For context, Broadcom’s annual revenue was about $51 billion in fiscal 2024.

Google and Meta Chip Orders

Jefferies analysts said their checks indicate Google’s Tensor Processing Unit volumes will climb sharply. 2026 shipments are expected to approach 3 million units.

Anthropic placed a new $10 billion order for roughly 250,000 units. Potential follow-on orders could push volumes even higher.

Meta is expected to ramp its first AI chip with high-bandwidth memory in the third quarter of 2026. The company plans to introduce an OpenAI ASIC later that year.

Revenue Projections Climb

Jefferies raised Broadcom’s 2026 revenue forecast to $100 billion. The 2027 estimate moved up to $130 billion.

The firm increased earnings per share estimates to $10.31 for 2026 and $13.88 for 2027. Analysts expect these numbers to continue rising over the next year.

Analysts model Broadcom’s AI-related revenue reaching $10 billion in calendar 2027. They said it could easily scale to $40-50 billion per year in 2028 and beyond.

The upside case implies earnings per share of $20 in 2027. That figure could hit $30 in 2028 if OpenAI’s capacity ramps by 2-3 gigawatts annually.

Broadcom stock jumped 12% in October following the OpenAI announcement. The stock price reflected investor enthusiasm for the custom chip opportunity.

Jefferies removed Nvidia from its Franchise Picks list as Broadcom took the top spot. The firm maintained a Buy rating on Nvidia and raised its target to $240 from $220.

Broadcom also confirmed signing a separate $10 billion deal with an unnamed customer. The company stated this customer was not OpenAI.

OpenAI has made multiple large commitments requiring substantial cash raises. The AI startup has agreements with Oracle for $300 billion in computing capacity.

Other deals include $38 billion with Amazon, 10 gigawatts with Nvidia, and 6 gigawatts with AMD. These commitments total hundreds of billions in spending.

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