Key Takeaways
- AVGO shares have declined 15% in the last 30 days, currently trading near $372—representing a 25% retreat from the $500 peak reached earlier
- The company partnered with OpenAI to introduce “Jalapeño,” a custom LLM inference chip designed to deliver significantly enhanced performance per watt compared to existing technology
- Jefferies analyst Blayne Curtis has assigned a Buy rating on the stock, characterizing the recent decline as a “meaningful opportunity,” while Wall Street’s consensus target sits at $516.91
- The semiconductor giant maintains a strategic partnership with Google extending to 2031, potentially generating over $500 billion in revenue from upcoming TPU iterations
- Analyst sentiment remains overwhelmingly positive with a Strong Buy consensus—24 Buy recommendations versus just 3 Hold ratings
The semiconductor giant Broadcom has experienced significant volatility in recent weeks. Following a climb to approximately $500 per share, the stock has retreated dramatically to the $372 range—marking a substantial 25% decline from its peak. The past 30 days alone have witnessed a 15% erosion in value.
Such dramatic price movements invariably capture the attention of market analysts. Currently, sentiment appears to be shifting toward the optimistic side.
This week, Jefferies analyst Blayne Curtis issued a Buy recommendation on AVGO shares, arguing that the recent downturn represents a “meaningful opportunity” for market participants. Curtis, who holds a 5-star rating, isn’t expressing a contrarian viewpoint.
His analysis coincides with a significant product unveiling that could influence Broadcom’s trajectory in the AI semiconductor space.
OpenAI Partnership Yields “Jalapeño” Processor
Recently, Broadcom and OpenAI announced their collaboration on a specialized chip dubbed Jalapeño. This represents OpenAI’s inaugural Intelligence Processor, purpose-designed specifically for large language model inference operations.
Inference workloads—the computational processes required when AI models generate outputs—have gained critical importance as organizations like OpenAI transition from pure model development to large-scale deployment scenarios.
According to Broadcom, Jalapeño delivers per-watt performance that is “substantially better than current state-of-the-art” solutions, though validation testing continues. Should these claims prove accurate, the chip could provide significant competitive advantages for OpenAI and potentially attract additional clients.
From Broadcom’s perspective, this development carries strategic significance. It demonstrates the firm’s capability to engineer bespoke silicon solutions for leading hyperscalers beyond its established Google collaboration.
Curtis emphasized that Jalapeño represents “an important step for AVGO on the road to further customer diversification beyond Google.”
Google Partnership Remains Critical Revenue Driver
Regarding Google—this partnership continues to represent a foundational element of Broadcom’s business model. The two companies maintain a comprehensive agreement extending through 2031, encompassing successive generations of Google’s Tensor Processing Unit architecture.
This arrangement features minimum revenue commitments, with projections suggesting cumulative revenue exceeding $500 billion through the end of the contract period.
Curtis anticipates that Broadcom’s TPU 8i will commence production during Q3 2026. He also dismissed concerns regarding potential competition from MediaTek, observing that MediaTek’s alternative TPU 8t is projected to ship in relatively modest volumes throughout this year.
Regarding valuation metrics, Curtis conducted scenario modeling that places Broadcom’s 2028 earnings per share in the $30-$40 range. At the current $377 price level, this translates to approximately a 10x P/E ratio on 2028 projections—which he considers attractive for an enterprise of Broadcom’s caliber.
The company’s latest quarterly revenue reached $22.2 billion, representing 48% year-over-year growth. Despite this robust performance, the market response was subdued. Currently trading at over 60 times earnings, investor expectations remain elevated.
Year-to-date, shares have appreciated approximately 9%.
The broader Wall Street community maintains a Strong Buy consensus rating on AVGO, composed of 24 Buy recommendations alongside 3 Hold ratings. The average analyst price target stands at $516.91, suggesting potential upside of roughly 37% from present trading levels.
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