Jefferies Raises Broadcom Price Target to $315: 19% Upside Ahead

Jefferies analyst Blayne Curtis reiterated a Buy rating on Broadcom (AVGO) and raised its price target to $315, citing significant upside potential driven by the company's strategic position in AI networking. Curtis's analysis highlights that Broadcom's new Tomahawk 6 networking chip enhances its ability to cross-sell ASICs to existing hyperscale networking customers, a key driver for AI revenue growth. This synergy, coupled with networking chip sales growing 170% last quarter, underpins the positive outlook for Broadcom's continued performance.

Analysis

Jefferies' upgraded price target on Broadcom (AVGO) to $315, substantially above the $281 consensus, is predicated on the strategic cross-selling opportunities between its networking and AI chip divisions. The core of this thesis is the analyst's observation that five of the seven potential hyperscale customers for Broadcom's Application-Specific Integrated Circuits (ASICs) are already clients of its networking segment. This existing relationship is seen as a significant catalyst for converting these clients to ASIC customers, addressing a key investor concern that led to a share price decline following the last earnings report. This potential is amplified by the recent launch of the Tomahawk 6 networking chip, which doubles data transfer capacity and directly supports the data center "scale-up" architectural trend. The networking division is already a powerful growth engine, with sales expanding 170% last quarter—more than triple the 46% growth of the total AI semiconductor business—and accounting for 40% of AI-related revenue. The company's confidence is further underscored by a substantial $4.2 billion share repurchase program in the last quarter, its second-largest on record.

Key Decisions for Investors

• Investors should assess Broadcom's networking business not just as a standalone segment, but as a leading indicator for future high-margin ASIC customer conversions, given the significant overlap in the hyperscale customer base.
• Monitor the market adoption and revenue impact of the new Tomahawk 6 chip, as its performance directly enables the "scale-up" data center trend and strengthens Broadcom's ability to cross-sell its AI-specific chips.
• Consider that the current market consensus may not fully price in the synergistic growth from the networking and ASIC segments, a view supported by both the aggressive Jefferies price target and the company's own significant $4.2 billion share buyback.