BofA reiterates Broadcom stock rating on Google, Anthropic deals By Investing.com

Investing.com - BofA Securities reiterated a Buy rating and $450.00 price target on Broadcom Limited (NASDAQ:AVGO) following the company's announcement of two separate TPU supply agreements. The target suggests significant upside potential, aligning with InvestingPro analysis indicating the stock is currently undervalued based on its Fair Value assessment.

Broadcom announced a five-year TPU design and supply agreement with Google (NASDAQ:GOOGL) for next-generation AI racks and a 3.5 GW TPU capacity agreement with Anthropic beginning in 2027. BofA Securities analyst Vivek Arya said the announcements increase Broadcom's visibility as a longer-term design partner for TPU.

The firm said custom ASIC programs generally provide stronger and longer visibility into customer deployment programs. BofA Securities said Broadcom is positioned to gain accelerator share in 2026 and 2027, moving from less than 10% in 2025 toward approximately 15% or higher.

The agreements follow prior expansions with OpenAI ranging from 1-10 GW. BofA Securities said the deals remove some prior stock overhang related to Google's intent to insource or diversify with MediaTek.

BofA Securities said Broadcom's valuation remains at approximately 18 times 2027 price-to-earnings including stock-based compensation. The firm said it continues to see more than $30 earnings per share potential by 2030 as Broadcom's custom ASIC programs provide multi-year visibility. The optimistic outlook is supported by strong fundamentals, with the company posting a 25% revenue growth rate and maintaining an impressive 77% gross profit margin. According to InvestingPro Tips, 35 analysts have revised their earnings upwards for the upcoming period, reinforcing confidence in the semiconductor giant's trajectory.

In other recent news, Broadcom Inc. announced a significant long-term agreement with Google to develop and supply custom Tensor Processing Units (TPUs) for Google's future AI needs, extending through 2031. This deal includes a supply assurance agreement for networking and other components for Google's next-generation AI racks. Additionally, Broadcom has expanded its strategic collaboration with Google and Anthropic PBC, enabling Anthropic to access 3.5 gigawatts of next-generation TPU-based AI compute capacity starting in 2027. These developments highlight Broadcom's strengthening position in the AI chip market.

Analysts have reacted to these announcements, with Rosenblatt and Jefferies both reiterating a Buy rating and setting a $500 price target for Broadcom, emphasizing the importance of the Google deal in solidifying Broadcom's role as a primary TPU supplier. D.A. Davidson maintained a Neutral rating with a $375 price target, reflecting a more cautious stance. In other company news, Broadcom announced a planned transition in its chief financial officer position. Kirsten M. Spears will retire as CFO in June 2026, with Amie Thuener set to succeed her, beginning her role in May 2026.

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