Bank of America resets Broadcom stock price target | Official Website of Louis Velazquez, entrepreneur, finance guy and tech innovator

Broadcom reported its Q4 earnings on November 11.

During the earnings call Hock Tan, president and CEO of Broadcom, said:

“Our custom-accelerated business more than doubled year-over-year, as we see our customers increase adoption of XPUs, as we call those custom accelerators, in training their LLMs and monetizing their platforms through inferencing APIs and applications.”

Here are the Broadcom Q4 earnings highlights:

Revenue of $18 billion, up 28% year over year
GAAP net income of $8.5 billion, up 97% YoY
Adjusted EBITDA of $12.2 billion or 68% of revenue, up 34% YoY
GAAP diluted EPS of $1.74, up 93% YoY

Broadcom provided an outlook for the Q1 fiscal year 2026:

Revenue of approximately $19.1 billion
Adjusted EBITDA of 67% of projected revenue

Marvell Technology, Broadcom’s competitor in semiconductor design, recently announced that it will acquire Celestial AI. Celestial AI is a developer of Photonic Fabric technology, a platform for scale-up of optical interconnects.

Tan addressed the question of whether Broadcom has a response to competitors’ silicon photonics.

“I could see a point in time in the future when silicon photonics matters as the only way to do it. We’re not quite there yet, but we have the technology, and we continue to develop the technology.”

Tan’s opinion is that the technology will be improved to its limit without photonics, and only once that has been done, will photonics be used.

Broadcom Q4 revenue increased 28% to $18 billion year over year.

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Bank of America raises Broadcom price target

Following the release of the earnings, Bank of America analyst Vivek Arya and his team updated their opinions on Broadcom (AVGO) stock. The team raised its estimates for fiscal years 2026-2027 for Broadcom’s pro forma EPS by 8% each, despite a higher tax rate and mix-driven gross margin pressure to $10.33 and $14.40, respectively.

Analysts said Broadcom confirmed Anthropic as its fourth customer, with an additional $11 billion of orders for late 2026 delivery. The company also announced its fifth customer designing its own custom ASIC over a “multi-year journey,” with a $1 billion initial delivery order in 2026.

Arya noted that Broadcom’s partnership with OpenAI to deploy 10 GW of custom compute capacity in the period of the second half of 2026 to 2029 remains intact.

The team stated that Google potentially pulling in design content internally over time, as well as MediaTek’s competition for TPUv8e (likely 10% to 20% of total v8 units), may reduce Broadcom’s addressable opportunity at Google/others.

In a research note shared with TheStreet, Arya reiterated a buy rating for AVGO stock and raised the target price from $460 to $500, based on a 33 multiple of his estimate for the price-to-earnings ratio for the calendar year 2027.

Analysts noted downside risk factors for Broadcom:

Semiconductor cycle risks
High exposure to Apple and Google with potential design out risks
Competitive risks in networking, smartphone, storage, and enterprise softwaremarkets
Frequent acquirer of assets, which increases financial and integration risks
Large $60 billion net debt

Broadcom’s recent activity

Broadcom and ING extended their partnership, and ING will adopt VMware Cloud Foundation 9.0 (VCF 9) as part of its private cloud strategy. ING will expand its existing VMware virtualized environment with VCF 9, leveraging the full-stack capabilities of the platform.

“VMware Cloud Foundation 9 will provide us with the unified, enterprise-grade private cloud platform necessary to achieve multi-region consistency, enhance workload mobility, and confidently meet the complex cloud sovereignty and compliance requirements that underpin our commitment to our customers,” ING Chief Technology Officer Daniele Tonella stated.

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Broadcom launched Brocade X8 Directors and Brocade G820 56-port switch. According to the company, they are the industry’s first 128G Fibre Channel platforms designed for today’s mission-critical workloads and enterprise AI applications.

The Brocade Gen 8 portfolio features quantum-resistant 256-bit encryption and other post-quantum cryptography algorithms to protect sensitive data and infrastructure from future quantum computers.

The company announced plans to expand its strategic partnership with NEC Corporation. NEC will implement VMware Cloud Foundation (VCF) into its IT systems. This will enable NEC to provide a higher quality of service when delivering VCF-based solutions to customers.

Broadcom is also advancing an open, extensible ecosystem for VCF, enabling customers to build, connect, protect, and extend their private clouds.

“The momentum behind VMware Cloud Foundation 9.0 is undeniable. It’s a platform that’s redefining how organizations approach their private cloud journey, offering a consistent operating model that spans data centers to the edge,” said Chief Product Officer Paul Turner, who leads Broadcom’s VMware Cloud Foundation Division.

“By fostering an open VCF ecosystem, we’re empowering businesses to build modern private clouds that align with their strategic needs, ensuring they can leverage the technologies required for their unique environments.”