Broadcom stock maintains Buy rating at HSBC on ASIC momentum

Investing.com - HSBC has reiterated its Buy rating and $535.00 price target on Broadcom Limited (NASDAQ:AVGO), citing improving ASIC momentum that it believes is not fully reflected in the current share price of $399.74. This target represents approximately 34% upside from current levels, though InvestingPro data suggests the stock is currently trading above its Fair Value estimate.

The firm notes that Broadcom shares have rallied approximately 15% since November 18, when Alphabet launched its Gemini 3 model, outperforming the S&P 500’s 4% gain during the same period. The market reaction follows Alphabet’s announcement that Gemini 3 was completely trained using TPUs rather than the traditional combination of GPUs and TPUs.

While Wall Street analysts have increased their fiscal year 2026 and 2027 ASIC revenue estimates by 5% and 14% respectively since the Gemini 3 launch, HSBC’s estimates remain significantly higher—38% and 40% above consensus for those years.

HSBC highlighted the growing market sentiment around TPUs as an alternative to GPUs, which has contributed to Broadcom’s recent share price performance. The firm had previously argued in a November 24 note that the market was undervaluing Broadcom’s ASIC opportunity.

Given the strengthening ASIC momentum and continuous CoWoS capacity expansion amid TPU demand from Alphabet, HSBC expects Broadcom management will likely raise its ASIC revenue guidance again during the company’s fourth-quarter fiscal year 2025 earnings call, scheduled for December 11.InvestingPro analysis rates Broadcom’s overall financial health as "GREAT" with a score of 3.12, particularly excelling in price momentum and profitability metrics. Investors looking for deeper insights into Broadcom’s valuation relative to its growth potential can access the company’s comprehensive Pro Research Report, one of 1,400+ available for top US equities through InvestingPro.

In other recent news, Broadcom Inc. has been highlighted in several significant developments. The company is facing supply constraints as it aims for $100 billion in data center sales, according to Bank of America. BofA anticipates an upside in Broadcom’s data center sales, driven by demand for Google’s Gemini 3 inferencing, with consensus estimates for fiscal year 2026 reaching $38.3 billion. In light of these prospects, BofA Securities has raised its price target for Broadcom to $460 from $400, maintaining a Buy rating. Raymond James has also assumed coverage of Broadcom with an Outperform rating, setting a price target of $420, citing the company’s growing influence in the AI sector.

Additionally, Broadcom recently unveiled its Brocade X8 Directors and Brocade G820 56-port switch, marking the industry’s first 128G Fibre Channel platforms for AI workloads. These new platforms feature advanced encryption and AI technology for automated infrastructure management. The company’s role in Google’s TPU ecosystem has been emphasized, with future potential for Google to rent TPUs to external customers. These developments underscore Broadcom’s strategic positioning in the technology landscape.

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