Morgan Stanley raises Broadcom stock price target to $338 on AI outlook

Morgan Stanley has significantly raised its price target on Broadcom (AVGO) to $338 from $270, maintaining an Overweight rating, citing an increased 2026 EPS multiple and the company's position as a 'most uncontroversial' AI play with a compelling bull case. This upgrade, alongside similar price target increases from Mizuho and Oppenheimer, reflects Broadcom's robust demand for AI and networking chips, its new high-performance Tomahawk Ultra Ethernet switch, and accretive high-margin software acquisitions. The consensus view underscores Broadcom's expanding earnings power and strong long-term outlook within the critical AI infrastructure sector.

Analysis

A strong bullish consensus is forming around Broadcom (AVGO), with multiple investment banks upgrading their outlook based on the company's integral role in the artificial intelligence infrastructure build-out. Morgan Stanley has led this charge by raising its price target to $338 from $270, a move justified by an expansion of its 2026 EPS multiple from 40x to 50x. This re-rating is underpinned by the firm's view of Broadcom as the "most uncontroversial of the AI names" with a "materially possible" path to achieving its ambitious 2027 serviceable addressable market (SAM) goals. The positive sentiment is reinforced by Mizuho and Oppenheimer, which raised their targets to $329 and $305, respectively, citing expanding earnings power and opportunities from resumed AI GPU shipments to China. Fundamentally, this optimism is supported by Broadcom's impressive 33.85% revenue growth over the last twelve months and strategic product launches, such as the new Tomahawk Ultra Ethernet switch, which offers 51.2 Tbps capacity tailored for AI workloads. The company's strategy of complementing its core semiconductor business with high-margin, recurring software revenue from acquisitions further strengthens its financial profile.

Key Decisions for Investors

• Given the unified bullish sentiment from multiple analysts and specific catalysts like the new Tomahawk switch, investors may consider AVGO a core holding to gain exposure to the secular growth in AI infrastructure.
• Investors should monitor the company's execution against its ambitious 2027 SAM guidance, as the premium valuation and expanded multiples cited by Morgan Stanley are contingent on achieving these long-term growth targets.
• The combination of cyclical AI hardware demand and a growing base of recurring, high-margin software revenue presents a compelling hybrid model, warranting a re-evaluation of Broadcom's position within a diversified technology portfolio.