TLDR
- Jefferies elevated Broadcom to Top Pick status and raised price target from $415 to $480
- The 10 gigawatt OpenAI deal could deliver $150-200 billion in revenue over multiple years
- Analysts forecast Broadcom revenue hitting $100 billion in 2026 and $130 billion in 2027
- Google TPU shipments expected to reach 3 million units in 2026 with Anthropic ordering 250,000 units
- Broadcom stock climbed 12% in October after announcing the OpenAI collaboration
Jefferies elevated Broadcom to its Top Pick position and designated it a Franchise Pick. The investment firm raised its price target to $480 from $415, citing custom AI chip demand.
Analysts led by Blayne Curtis said Broadcom’s Application-Specific Integrated Circuit business has reached an inflection point. Major tech companies are accelerating orders for custom AI accelerators.
The chipmaker announced a collaboration with OpenAI on October 13. The partnership covers custom AI chips consuming 10 gigawatts of power.
OpenAI will handle chip and system design. Broadcom provides Ethernet connectivity solutions and assists with development and deployment.
Wall Street analysts estimate the OpenAI deal could generate $150 billion to $200 billion in revenue. First systems deploy in the second half of 2026, with full capacity online by end of 2029.
Broadcom reported roughly $51 billion in annual revenue for fiscal 2024. The OpenAI partnership alone could triple that figure over the deal’s lifetime.
Hyperscaler Orders Driving Growth
Jefferies research indicates Google’s Tensor Processing Unit volumes will surge. 2026 shipments are projected to approach 3 million units.
Anthropic recently placed a $10 billion order for approximately 250,000 units. Additional follow-on orders could push volumes higher.
Meta plans to ramp its first AI chip with high-bandwidth memory in Q3 2026. The social media giant will introduce an OpenAI ASIC later that year.
Revenue and Earnings Projections
Jefferies increased Broadcom’s 2026 revenue estimate to $100 billion. The 2027 forecast jumped to $130 billion.
Earnings per share estimates rose to $10.31 for 2026 and $13.88 for 2027. Analysts expect continued upward revisions over the next year.
The firm models AI-related revenue reaching $10 billion in calendar 2027. That figure could scale to $40-50 billion annually in 2028 and beyond as hyperscaler buildouts accelerate.
The upside case suggests earnings per share of $20 in 2027. If OpenAI’s capacity ramps by 2-3 gigawatts yearly, EPS could hit $30 in 2028.
Broadcom gained 12% in October following the OpenAI announcement. Investor enthusiasm for custom chip opportunities drove the price increase.
Jefferies Shifts Focus from Nvidia
Jefferies removed Nvidia from its Franchise Picks list as Broadcom claimed the top spot. The firm maintained a Buy rating on Nvidia with a raised price target of $240 from $220.
Broadcom confirmed signing a separate $10 billion deal with an unnamed customer. The company stated this customer was not OpenAI, indicating broader custom chip demand.
OpenAI has secured multiple large computing commitments. The AI startup has deals with Oracle worth $300 billion, Amazon for $38 billion, Nvidia for 10 gigawatts, and AMD for 6 gigawatts.
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