TLDR
- Broadcom stock gains 6% in after-hours trading as Alphabet commits up to $185 billion in capital expenditures for 2025
- Jefferies analysts keep Buy rating with $500 target price, indicating 62% potential upside from current $308.05 level
- Broadcom projected to win 85-90% of Google’s estimated 6 million chip units in 2027, maintaining edge over MediaTek
- Jim Cramer labels Broadcom “a winner” and suggests buying after stock falls 100 points from peak levels
- Company’s networking division shows strong performance with TH6 ramp and market share gains in DSP segment
Broadcom shares jumped 6% in extended trading Wednesday after Alphabet announced capital expenditure plans reaching $185 billion for the current year. The massive spending commitment strengthens Broadcom’s position as a key supplier of custom chips to Google.
The stock currently trades at $308.05. Broadcom carries a market capitalization of $1.46 trillion with gross margins of 77.3%.
Jefferies maintains its Buy rating with a $500 price target on the shares. The target represents a 62% gain from current trading levels.
The investment firm called Google’s spending announcement a powerful signal for AI infrastructure investment. Jefferies also noted capital raising progress at OpenAI, xAI, and Oracle as positive developments.
Jim Cramer offered his perspective on Broadcom during recent market analysis. While acknowledging the entry point could be better, he praised the company’s competitive strength.
“This company is a winner in this environment, not a loser,” Cramer explained. He recommended patience for further declines while maintaining bullish conviction.
The shares have fallen approximately 100 points from recent highs. Cramer sees this pullback as an attractive entry point given CEO Hock Tan’s track record of consistent quarterly performance.
Custom Chip Business Dominates
Jefferies tackled investor questions about Broadcom’s custom on-package chip operations. The firm confirmed Broadcom holds a substantial technical advantage over rival MediaTek.
The lead applies to both current v8 chips and upcoming v9 generation products. Jefferies estimates Google will require 6 million total units during calendar year 2027.
Broadcom should capture between 85% and 90% of that order volume. The analyst firm sees potential for total unit numbers to increase beyond current projections.
Cramer highlighted Broadcom as an affordable entry point into artificial intelligence investments. He emphasized growth across both the software and hardware business lines.
The company ships semiconductor devices and infrastructure software solutions. Core applications include data centers, telecommunications networks, and AI computing systems.
Wall Street Upgrades Continue
Several major firms have revised their Broadcom ratings higher recently. Wolfe Research upgraded to Outperform based on Google’s Tensor Processing Unit demand.
Wells Fargo shifted to Overweight, expressing confidence in multiple catalysts through 2026. RBC Capital started coverage with a Sector Perform rating.
Jefferies sees particular strength in the networking business unit. This segment could exceed ASIC revenue growth in the current quarter.
The TH6 product ramp drives part of this momentum. Additional gains come from DSP market share increases and solid demand in China.
Broadcom recently unveiled the industry’s first Wi-Fi 8 platform for enterprise AI networks. The solution pairs the BCM49438 processor with the Trident X3+ BCM56390 switch.
The company closed a $4.5 billion senior notes issuance with maturity dates spanning 2031 to 2056. Revenue growth currently runs at 23.9% annually.
Nvidia stock added 2% in after-hours trading following the Google announcement. Memory chip makers Sandisk and Micron each rose 4% after declining sharply during Wednesday’s regular session.
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