Broadcom recently reported record third-quarter results, highlighted by strong growth in AI-related revenue and a multi-billion-dollar custom AI chip contract, reportedly with OpenAI, along with a new partnership with Lloyds Banking Group and several new fixed income offerings to optimize its debt structure.
The company’s growing leadership in AI, successful VMware integration, and new high-profile customer wins have led to positive credit rating upgrades and reinforced its positioning in the rapidly evolving semiconductor and infrastructure software markets.
We’ll explore how Broadcom’s landmark AI chip contract and surging AI revenues influence its long-term investment narrative.
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To own Broadcom shares, you need to believe in its long-term AI leadership, robust custom chip demand, and successful VMware integration, all driving earnings and margin growth. The recent end-of-support announcement for vSphere 7.x highlights management’s focus on software modernization and recurring revenue, but is unlikely to materially impact the short-term catalyst, which remains accelerating AI chip orders from hyperscale clients; customer concentration among a few top buyers is still Broadcom’s single biggest risk.
Of the company’s latest moves, the $10 billion multi-year AI chip contract with OpenAI stands out, providing strong validation of Broadcom’s positioning as a preferred supplier for next-generation AI infrastructure. This win builds on the company’s momentum in securing large custom silicon contracts, supporting forward guidance and reinforcing its AI revenue growth as the key catalyst for near-term performance.
However, as much attention as AI wins attract, investors should also be aware of Broadcom’s reliance on a handful of hyperscale customers for future growth…
Read the full narrative on Broadcom (it’s free!)
Broadcom’s projections suggest $119.6 billion in revenue and $50.8 billion in earnings by 2028. This outlook is based on a 25.9% annual revenue growth rate and a $32.0 billion increase in earnings from the current $18.8 billion.
Uncover how Broadcom’s forecasts yield a $366.50 fair value, a 8% upside to its current price.
AVGO Community Fair Values as at Oct 2025
The Simply Wall St Community’s 43 fair value estimates for Broadcom span from US$214.18 to US$370.36 per share. With custom AI chip sales concentrated among a few customers, these varied outlooks reflect how different investors weigh the stability of Broadcom’s future earnings streams.
Explore 43 other fair value estimates on Broadcom – why the stock might be worth 37% less than the current price!
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Companies discussed in this article include AVGO.
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