Jefferies says Alphabet’s spending plans are great for Broadcom. The analyst sees a 60% surge
Jefferies said Broadcom remains well-positioned to benefit from the next wave of artificial intelligence spending. The bank maintained its buy rating on the semiconductor stock and reiterated Broadcom as a top pick. Analyst Blayne Curtis’ $500 price target implies that shares could rally 62% from Wednesday’s close of $308.05. Broadcom stock has surged 36% over the past 12 months, but are down 9% on the year. AVGO 1Y mountain AVGO 1Y chart One current overhang on the stock, Curtis wrote, has been the sustainability of artificial intelligence spending. However, the analyst cited Alphabet ‘s material step-up in capital expenditures guidance as proof of continued investments that could ultimately benefit Broadcom. Alphabet said in its Wednesday earnings report that it expects 2026 capital expenditures to come in the range of $175 billion to $185 billion. The top end of that forecast is more than double the company’s spend in 2025. “Clearly the Google capex guide offers a significant vote of confidence for AI spend moving higher, but you also have news of capital raising progress from the other players such as OAI, xAI, and Oracle ,” he wrote. Curtis said Broadcom has an edge over rival MediaTek in supplying Alphabet’s next two major chip generations. “AVGO and MTK are working on two different SKUs (AVGO v8ax and MTK v8x) and we believe most, if not all, of the demand will be for the higher performance AVGO chip, similar to what happened with v6e vs v7x,” the analyst wrote. “Our bottom-up model has 6M units total for Google in C27 with 85-90% going to AVGO and we see room for that overall number to move up further.” Meanwhile, investors have also been worried about the overhang from customer-owned tooling, where clients design their own in-house chips, potentially limiting Broadcom’s pricing power and margins. But Curtis also believes that this concern is dissipating. “We also see the [customer-owned tooling] overhang as overdone, with strong networking momentum driving additional upside alongside the [application-specific integrated circuit] opportunity,” he wrote.
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