Broadcom’s Consensus Target Jump to $518.40 on AI Chip Demand, Margin Risks
AVGO•Broadcom’s strong AI chip demand and VMware-driven software growth underpin rising analyst optimism, lifting the consensus price target from $430.06 to $518.40 this month. However, expanding sales of lower-margin XPUs threaten to compress overall profit margins.
1. Robust AI Chip Demand and VMware Growth
Broadcom continues to see accelerating orders for its AI training and inference chips, while its VMware software division delivered double-digit revenue growth last quarter, reinforcing its full-year revenue outlook.
2. Consensus Price Target Increases by 20.6%
The average analyst price target has risen from $430.06 to $518.40, a 20.6% increase year-to-date, with individual forecasts ranging from $450.00 to $680.00, reflecting heightened confidence in Broadcom’s AI and infrastructure software segments.
3. Margin Pressure from Lower-Margin XPUs
Growing sales of specialized XPUs, which carry lower gross margins than Broadcom’s flagship AI chips, could erode overall profit margins if the company’s product mix shifts toward these lower-margin units.
