Key Takeaways
- Rosenblatt Securities reiterated its Buy rating and $600 price target on Broadcom on Oct. 27, 75% above the stock’s price, after a $63 billion financing deal for Anthropic’s Broadcom chips.
- Broadcom’s AI revenue keeps growing, but Anthropic and OpenAI, its two biggest future customers, need financing that Broadcom helps back.
- Rosenblatt’s target is 18x its fiscal 2028 earnings estimate, which is below the stock’s 24x five-year average forward P/E, so the call depends on those earnings arriving.
- The math works, but the target leaves little room for trouble at Anthropic. Broadcom’s December report and Anthropic’s IPO are the next tests.
Broadcom (AVGO) closed Oct. 26 32% below its June 2 high. Rosenblatt Securities thinks that selloff has gone too far: on Oct. 27, it reiterated its Buy rating and $600 price target, 75% above the stock’s $342.33 close.
The growth came with strings
Third-quarter AI semiconductor revenue hit $16.7 billion, up 221% year over year, and management expects about $115 billion in fiscal 2027 and $230 billion in fiscal 2028.
The worry is who pays. CEO Hock Tan expects Anthropic to be Broadcom’s largest custom-chip customer in 2027 and OpenAI its second largest in 2028, and both need help funding the chips. Broadcom backs up to about $29 billion of leases on the first financing deal, which is more than the $24.0 billion of cash it held on Aug. 2.
Rosenblatt counts the backstop as income
On Oct. 26, Bank of America, Blackstone, Citi and Morgan Stanley announced a $63 billion structure to buy Broadcom-based computing capacity and lease it to Anthropic.
Rosenblatt points out that Broadcom earns about 200 basis points on the balance it supports, on top of the chip price. The $600 is 18x Rosenblatt’s fiscal 2028 non-GAAP earnings estimate, and Tan says Broadcom is “very much on target to exceed $30 in earnings per share” that year.
TIKR tracks 51 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’s average target has climbed to $529, [55%] above the price, from $392 a year ago, even as the stock slipped.
Among the 51 analysts covering Broadcom, targets run from $216 to $660. Estimates have held up too: $19.47 a share in fiscal 2027, against $19.58 three months ago, and $30.37 in fiscal 2028.
The $63 billion deal shouldn’t raise those numbers, since Anthropic’s 2027 chips are already in management’s $115 billion. It makes them likelier to hold.
Broadcom traded at 19x forward earnings at the Oct. 26 close, against a five-year average of 24x. The $600 works out to 35x those forward estimates.
A year from now, though, the next twelve months will be roughly fiscal 2028. At Rosenblatt’s 18x, the call depends on those earnings showing up.
It all runs through two labs
Rosenblatt’s math holds up, but counting the backstop as a fee skips what happens if Anthropic stumbles. Broadcom would lose growth from its largest custom-chip customer and face its own guarantees in the same year. The selloff may have gone too far, but until Anthropic is public, $600 asks investors to take that risk on faith.
The first test is Broadcom’s fourth-quarter report in December, and whether management repeats its $115 billion for fiscal 2027. Anthropic’s IPO is the second.
So what is Broadcom stock actually worth?
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
