Broadcom (AVGO) stock has fallen 3.7% over the past week and 3.5% over the past month, but it is still up 43.4% over the last 12 months. Wall Street’s analysts are firmly bullish, with a StrongBuy consensus and forecasting a move toward an average 12‑month price target of $453.52 from the last close at $331.17.
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Despite that bullish backdrop, analyst Gil Luria of D.A. Davidson has taken a more cautious stance, initiating coverage with a Hold rating and a $335 price target, implying only modest upside from current levels. Luria’s view is that Broadcom’s AI ASIC business may be “sitting on a shrinking iceberg” as hyperscalers push to internalize more of their technology stack.
Luria argues that while Broadcom’s edge lies in its full‑stack execution and ability to solve complex rack‑scale integration problems, large customers ultimately want to pay only for what they cannot build themselves. He sees a credible path for big players to close the gap with Broadcom and pressure supplier economics, especially as they unbundle scope, multi‑source suppliers, and pay strictly on a value‑add basis.
Examples like Google’s split TPU tracks with v8, its Zebrafish effort, and growing volume with MediaTek for cost reasons highlight this shift in bargaining power, according to the report. In this view, Broadcom may remain a critical partner on the hardest pieces, but the scope and pricing per program could narrow over time, pushing AI ASICs toward more commodity‑like economics.
Still, Luria sees networking as Broadcom’s durable franchise, benefiting from rising data traffic and a steady march from 400G to 800G and toward 1.6T Ethernet, plus the shift to co‑packaged optics where Broadcom’s competencies in switch silicon and SerDes matter most. He values shares at 30 times his 2026 EPS estimate, notes a solid 31.5% trailing return on equity, and reminds investors that Broadcom’s roots stretch back over 40 years to its origins within Hewlett Packard and later Agilent before becoming Avago Technologies.
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