Oppenheimer Keeps Outperform on Broadcom, $265 Price Target

Oppenheimer analyst Rick Schafer reiterated an Outperform rating and $265 price target on Broadcom Limited (NASDAQ: AVGO) following a bus tour where they met with CEO Hock Tan, CFO Kirsten Spears, and IR Director Ji Yoo.

“We had the opportunity to meet with AVGO CEO Hock Tan, CFO Kirsten Spears and IR Director Ji Yoo this week on our 23rd Annual Semiconductor Bus tour.

Tone was upbeat as mgmt. conveyed bullish outlook on several ASIC projects. Mgmt. sees the biggest customers, with the most staying power as those hyperscalers with frontier LLMs.

AI remains a race among giants. Mgmt. sees roughly seven hyperscalers with LLM ambition. In our view, that number could settle in the low-mid single-digits.

To achieve AGI, those developing LLMs have heavily leveraged powerful (NVDA) merchant GPUs.

Mgmt. sees hyperscalers (w/ LLMs) migrating over time to increasingly use custom XPUs for greater optimization and improved TCO.

AVGO’s decade-plus GOOG partnership has been fruitful and ahead of trend.

GOOG invented the TPU in 2015, refreshing the design roughly every 18 months (TPUv6 due 2H), and today doesn’t need to rely on merchant for internal workloads.

Mgmt. sees each of AVGO’s three existing core AI ASIC customers (we believe GOOG, META, ByteDance) deploying 1M XPU/ GPU clusters by CY27.

We see a path to multi-gigawatt DCs supporting 3M AI clusters over the next five years.

AVGO has also announced four AI ASIC prospects, with hopes that at least one will convert to revs. in CY26 and another in CY27. It takes about three Qs from tape out to revenue.

Hyperscalers attempting to balance training and inference investment, with the latter accelerating faster than anticipated of late. XPUs are relatively fungible across training and inference.

Training is capex and compute intensive (TFLOP-heavy), providing the frontier LLM foundation. Inference, is more memory intensive (HBM-heavy), offers obvious monetization opportunity.”

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