TLDR
- Jefferies reiterates Buy rating on Broadcom with $500 price target, representing 62% upside from current $308.05 price
- Jim Cramer calls Broadcom “a winner in this environment” and recommends buying at current levels, noting it’s down 100 points from its high
- Google’s plan to spend up to $185 billion on capital expenditures this year boosts Broadcom stock by 6% in extended trading
- Jefferies projects Broadcom will capture 85-90% of Google’s 6 million chip units in 2027, ahead of competitor MediaTek on v8 and v9 chips
- Broadcom’s networking business shows strength with TH6 ramp and DSP share gains potentially outpacing ASIC performance this quarter
Broadcom stock jumped 6% in extended trading Wednesday after Google parent Alphabet announced plans to spend as much as $185 billion on capital expenditures this year. The spending commitment provides a major boost to Broadcom’s custom chip business.
Jefferies maintained its Buy rating and $500 price target on the stock. The target represents a 62% upside from the current price of $308.05.
The investment firm called Google’s capital expenditure guidance a major vote of confidence for AI spending. Jefferies also pointed to capital raising progress from OpenAI, xAI, and Oracle as positive indicators.
Jim Cramer expressed bullish views on Broadcom during recent market commentary. When asked about timing, he acknowledged the stock isn’t at peak entry levels but emphasized the company’s quality.
“This company is a winner in this environment, not a loser,” Cramer said. He suggested investors wait for further pullback but remains confident in the long-term outlook.
The stock has fallen approximately 100 points from its high. Cramer views this as a buying opportunity given the company’s consistent execution.
Custom Chip Dominance
Jefferies addressed concerns about Broadcom’s custom on-package business. The firm stated Broadcom maintains a clear lead over MediaTek on v8 chips.
This advantage will continue with v9 chips in both timing and capabilities. Jefferies projects 6 million total units for Google in calendar 2027.
Broadcom should capture 85-90% of that business. The firm noted room for the overall number to move higher.
Cramer highlighted Broadcom as one of the cheaper ways to play artificial intelligence. He praised CEO Hock Tan’s track record of delivering quarter after quarter.
The company supplies semiconductor devices and infrastructure software. Products include networking, connectivity, and storage solutions for data centers, telecommunications, and AI networking.
Networking Business Strength
Jefferies pointed to strength in Broadcom’s networking segment. The business could potentially outpace ASICs in the current quarter.
The TH6 ramp drives part of this growth. DSP share gains and strong China performance add to momentum.
Broadcom launched the industry’s first Wi-Fi 8 solution for AI-ready enterprise networks. The platform integrates the BCM49438 processing unit and Trident X3+ BCM56390 Ethernet switch.
Wolfe Research upgraded Broadcom to Outperform, citing benefits from Google’s Tensor Processing Units. Wells Fargo also upgraded the stock to Overweight.
RBC Capital initiated coverage with a Sector Perform rating. The firm pointed to discussions on AI growth with Anthropic and OpenAI.
Broadcom recently issued $4.5 billion in senior notes. Maturities range from 2031 to 2056 as part of its financial strategy.
The company operates with gross profit margins of 77.3%. Revenue growth stands at 23.9% with a market capitalization of $1.46 trillion.
Nvidia stock rose 2% in late trading on Google’s spending announcement. Memory and hardware stocks including Sandisk and Micron each gained 4% in extended trading after selling off sharply during Wednesday’s regular session.
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