Broadcom stock price target raised to $370 from $355 at TD Cowen on AI growth

Multiple analysts, including TD Cowen, have raised price targets for Broadcom (AVGO) following robust fiscal third-quarter results, with TD Cowen moving to $370 from $355. The semiconductor giant reported 28% year-over-year revenue growth and a 77.19% gross margin, driven by a 63% surge in AI semiconductor revenues to $5.2 billion. Broadcom's strong performance and future outlook are further bolstered by a new XPU customer expected to contribute an additional $10 billion in revenue by the second half of fiscal 2026, solidifying its dominant position in the expanding AI market.

Analysis

Broadcom (AVGO) is demonstrating significant operational momentum, validated by a wave of analyst price target upgrades following robust fiscal third-quarter results. The company reported a 28% year-over-year revenue increase and a highly profitable 77.19% gross margin, with earnings of $1.69 per share on $16 billion in revenue exceeding consensus expectations. The primary growth driver is the artificial intelligence segment, where semiconductor revenues surged 63% year-over-year to $5.2 billion, with KeyBanc projecting this will accelerate to 66% growth in the fourth quarter. This performance has prompted firms like TD Cowen, Piper Sandler, KeyBanc, Bernstein, and Rosenblatt to raise their price targets, with new targets ranging from $370 to $400. The forward-looking outlook is exceptionally strong, underpinned by a new XPU customer order valued at approximately $10 billion, which management expects to contribute to revenue in the second half of fiscal 2026. While TD Cowen noted potential gross margin headwinds as Broadcom scales this new business, the firm views the company's growth targets as achievable, reflecting deep confidence in its execution and market position within the AI supply chain.

Key Decisions for Investors

• Given the strong consensus among analysts and concrete evidence of accelerating AI-driven revenue, investors may view the recent positive guidance as a strong signal of sustained growth, warranting a bullish outlook.
• Investors should closely monitor gross margin performance in coming quarters, as the ability to maintain profitability while scaling the steep ramp-up of its new XPU business will be a critical test of the company's operational efficiency.
• The confirmation of a new $10 billion XPU customer win for H2 2026 provides a significant, long-term revenue catalyst that should be factored into valuation models, potentially justifying the company's premium valuation.
• Consider exploring second-order beneficiaries within Broadcom's supply chain, such as Celestica, which is positioned to gain from the increased adoption of Broadcom's custom silicon by major AI players like OpenAI.