Semiconductor giant Broadcom’s (AVGO) board has set an ambitious sales target for its CEO, Hock Tan, as part of his contract extension, to receive hundreds of millions of dollars in stock compensation. To secure these awards, Broadcom must generate $120 billion in artificial intelligence (AI) product sales by 2030.
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The move comes as Broadcom intensifies its competition with chip giant Nvidia (NVDA) in the development and sale of custom AI chips. Last week, the company beat both sales and earnings expectations for the third quarter of fiscal 2025, driven by surging demand for custom AI accelerators (XPUs) and continued momentum from its VMware integration.
Broadcom Sets Ambitious AI Sales Targets
According to a regulatory filing on September 9, Tan could earn 610,521 shares of AVGO if Broadcom’s AI revenue hits $90 billion by fiscal 2030. That would translate to roughly $205.5 million based on the closing price of $336.67 on September 9. Furthermore, if AI sales reach $120 billion, he would receive about $616.6 million at current price levels.
Last week, Broadcom’s board agreed to extend Tan’s tenure as CEO through “at least” 2030. As part of this extension, the board set aggressive AI sales targets to motivate long-term performance. In the filing, the company stated, “the independent members of the Board approved the Tan PSU Award to incentivize Mr. Tan to extend his leadership of the Company through fiscal 2030.”
Broadcom Steps Up Competition with Nvidia
Broadcom is set on a mission to dethrone Nvidia in the custom AI chips race. Broadcom’s strategy differs from Nvidia’s because the latter leads in general-purpose GPUs (graphics processing units), while Broadcom builds custom XPUs for large clients. These chips offer better cost, scale, and performance tied to customers’ specific workloads.
Until the last quarter, Broadcom had three major but unnamed customers contributing to its XPU-related AI revenue. However, during its Q3 earnings call, Tan revealed that Broadcom had won a major fourth customer. Reports later suggested that this new customer is ChatGPT maker OpenAI, which is expected to begin contributing to Broadcom’s revenue in the fourth quarter. OpenAI has reportedly placed orders worth $10 billion for custom AI chips as part of a strategy to reduce reliance on Nvidia.
Is AVGO a Good Buy Right Now?
Analysts remain highly optimistic about Broadcom’s long-term outlook. On TipRanks, AVGO stock has a Strong Buy consensus rating based on 27 Buys and two Hold ratings. The average Broadcom price target of $375.56 implies 11.6% upside potential from current levels. Year-to-date, AVGO stock has surged 46%.
