Key Takeaways
- Broadcom shares gained more than 1% Tuesday, finishing at $389.32
- Investment capital shifted from software to hardware following IBM’s disappointing Q2 guidance
- Morgan Stanley’s Joseph Moore maintained his Buy rating with a $502 price objective
- Moore estimates Broadcom commands approximately 80% of Google’s TPU chip supply and should retain dominance
- Analyst consensus stands at Strong Buy for AVGO, with average target price of $513.29
Broadcom (AVGO) finished Tuesday’s trading session more than 1% higher at $389.32, defying weakness across the broader technology sector. The upward movement stemmed from two key catalysts: capital rotation away from software names and renewed optimism from Morgan Stanley.
The catalyst for the software sector downturn came from IBM’s premature disclosure of its second-quarter results. IBM issued a warning that both top-line revenue and adjusted net income would fall short of Wall Street’s expectations.
IBM’s chief executive Arvind Krishna explained the underlying dynamic: enterprise clients were reallocating budgets toward storage solutions, memory components, and server infrastructure instead of software purchases, partially in anticipation of price hikes related to AI infrastructure expansion.
This reallocation of corporate spending drew attention to hardware manufacturers like Broadcom. The semiconductor company produces specialized AI accelerators and AI networking chips, positioning it directly in the path of this capital flow.
AVGO has posted just 13% gains year-to-date, underperforming multiple semiconductor competitors. This relative weakness stems primarily from one key question: what portion of Google’s Tensor Processing Unit chip orders will shift to MediaTek versus remaining with Broadcom.
Morgan Stanley Reaffirms Confidence
Morgan Stanley analyst Joseph Moore tackled this concern head-on. He maintained his Overweight (Buy) recommendation on AVGO with a $502 price objective, stating “AVGO remains a core AI winner.”
Moore recognized that MediaTek has indeed secured a legitimate position in Google’s TPU ecosystem. Google has strategic reasons to diversify its supplier base, and MediaTek represents a credible partner for 3nm TPU production.
However, Moore doesn’t view this as a meaningful competitive threat. He projects Broadcom will maintain approximately 80% of Google’s TPU supply chain over the long term. He characterized concerns about AVGO’s share declining to 50% or being eliminated altogether as “premature.”
His rationale centers on Broadcom’s competitive advantages: superior access to high-bandwidth memory, advanced packaging infrastructure, and manufacturing scale that rivals cannot easily duplicate.
Moore further highlighted that Broadcom has multiple new ASIC clients scheduled to increase production volumes in the second half of 2027. This diversification provides growth momentum independent of the Google partnership.
Street Consensus
Moore’s bullish stance reflects broader Wall Street sentiment. The overall analyst consensus on AVGO stands at Strong Buy, supported by 23 Buy recommendations against only three Hold ratings.
The consensus price target reaches $513.29, suggesting approximately 32% appreciation potential from current trading levels.
Moore positions Broadcom as the second-most compelling AI chip investment after Nvidia, driven by its ASIC market leadership and networking product portfolio.
The stock traded in a range between $384.71 and $397.24 on Tuesday. Its 52-week range spans from $273.00 to $495.00, illustrating the substantial pullback from recent peak levels.
Morgan Stanley’s research note represented the latest analyst commentary on the stock, issued on July 15, 2026.
Get 3 Free Stock Ebooks
Discover top-performing stocks in AI, Crypto, and Technology with expert analysis.
- Top 10 AI Stocks - Leading AI companies
- Top 10 Crypto Stocks - Blockchain leaders
- Top 10 Tech Stocks - Tech giants
