Key Takeaways
- Broadcom stock is down [34%] from its June high, and Tigress Financial started coverage today with a Buy rating and a $600 target, [83%] above the share price.
- Analysts’ earnings estimates for Broadcom have held steady through the sell-off, so investors are paying less for the same expected earnings.
- The $600 target works out to about 35x forward earnings. Broadcom’s five-year average is 24x.
- Tigress’s call is plausible but stretched: it needs a higher multiple on today’s estimates, or earnings growth as fast as Wall Street expects.
Broadcom (AVGO) stock is down 35% from its 52-week high of $495 in early June, at about $324 as of this writing.
Today, Tigress Financial’s Ivan Feinseth started coverage with a Buy rating and a $600 price target, 83% above that price. Let’s work the math.
The CEO’s capital warning didn’t help
Fiscal third-quarter revenue, reported Sept. 2, rose 86% from a year earlier to $29.6 billion, and AI semiconductor revenue more than tripled to $16.7 billion.
The worry is about who pays for all those chips. In early October, Broadcom was lining up a $42 billion loan commitment for Anthropic, and then $50 billion so OpenAI can buy its chips.
Then on Monday, Oct. 12, CEO Hock Tan said at a conference in Singapore that capital could become AI’s biggest constraint.
The stock fell 4.5% that Friday, Oct. 16.
Tigress is betting on the runway
Feinseth sees a “powerful multi-year growth opportunity,” driven by Broadcom’s custom AI accelerators and networking, plus VMware’s high-margin recurring software revenue.
Management is just as bullish. On the third-quarter call, Tan said Broadcom has secured the supply to double AI revenue to about $115 billion in fiscal 2027.
TIKR tracks 50 analysts on Broadcom. How many say “Buy”?
See the full breakdown of Buy, Hold, and Sell ratings on Broadcom, along with Wall Street’s revenue and earnings estimates, all in one place. More than 500,000 investors use TIKR to research stocks like this one. See Broadcom’s Analyst Ratings
Does $600 add up?
Wall Street was already bullish. The consensus target has climbed from $391 a year ago to $528, while the stock went nowhere…
Tigress’s $600 sits above that consensus but below the Street’s high of $660.
The estimates haven’t budged through the sell-off. Consensus calls for EPS of $19.40 in fiscal 2027, against $19.48 90 days ago. For fiscal 2028 it’s $30.39, in line with the “more than $30” Tan targeted on the call…
Tan’s warning came with no guidance cut, so I see no reason for those estimates to fall.
That makes the stock cheaper. Broadcom trades at 19x forward earnings as of the Oct. 21 close. Its five-year average is 24x…
Divide $600 by the $17.34 a share analysts expect over the next 12 months, and you get about 35x.
Plausible, but stretched
The risk is concentration. Tan expects Anthropic and OpenAI to be Broadcom’s two biggest custom-chip customers by 2028, and both need outside money to pay for those chips.
My take: On today’s estimates, $600 needs a multiple well above Broadcom’s five-year average. But if analysts are right about fiscal 2027 and 2028, the multiple it takes to get there shrinks fast.
The next test is fourth-quarter results in December. Watch whether AI revenue lands near the $21.7 billion guidance, and what Tan says about how Anthropic and OpenAI will pay for their chips.
So what is Broadcom stock actually worth?
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Disclaimer:
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