Broadcom (NASDAQ:AVGO) investors have watched the company’s AI ambitions turn into a powerful growth engine, and that momentum was front and center at J.P. Morgan’s recent US All Stars Conference in London. There, 5-star analyst Harlan Sur sat down with Broadcom CFO Kirsten Spears, and the discussion left him impressed with how strongly the company is positioning itself in the AI-driven era.
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In those conversations, Spears emphasized that robust AI demand is driving significant growth in Broadcom’s custom AI XPU business and boosting sales of its high-performance networking products. Importantly, she also pointed out that strength in AI is being complemented by early signs of recovery in the non-AI semiconductor segments, which should add another leg of growth next year, while the VMware business continues to expand at a steady pace.
From Sur’s perspective, the message was clear. AI demand remains exceptionally strong, with Broadcom confident that each of its customer engagements could eventually scale to one million XPU AI clusters. The analyst also pointed to CEO Hock Tan’s ambitious $120 billion AI revenue incentive target by 2030, underscoring management’s history of outpacing goals. Finally, he noted Broadcom’s momentum in product technology, with the company on track to tape out its first-generation 2nm/3.5D package AI XPU products this year for a prospective customer, a milestone that positions Broadcom ahead of merchant GPU rivals as the clear “technology leader.”
Broadcom is also “moving up the stack,” delivering not just silicon but full AI rack-scale deployments. While this approach carries lower margins due to pass-through costs, it still adds to gross and operating profits. Significant growth opportunities also remain in scaling up, scaling out, and scaling across networking, with Ethernet fabric continuing to be the preferred architecture.
At the same time, bookings are increasing in non-AI areas, showing early signs of recovery in broadband, server storage, and enterprise networking, though revenue recovery is following a “U”-shaped path, yet a “potential acceleration” is on the menu going into FY26. Finally, the team expects the VMware VCF platform conversion to finish by the end of FY26, suggesting to Sur “continued strong” double-digit year-over-year growth, after which infrastructure software growth is expected to settle in the mid- to high-single-digit range.
Moving forward, the company plans to reinvest in the business – especially in the significant AI growth opportunities – while maintaining a 50% free cash flow return to shareholders and prioritizing debt reduction.
Based on all the above, Sur maintains a highly positive stance, noting: “Broadcom remains our top overall pick in semiconductors, given its diversified business model, best-in-class margin profile, and strong exposure to secular growth trends in AI/datacenter and infrastructure.”
To this end, Sur, who’s ranked amongst the top 1% of Street stock pros, assigns AVGO an Overweight (i.e., Buy) rating and a $400 price target, suggesting ~15% upside from current levels. (To watch Sur’s track record, click here)
Sur’s Wall Street colleagues mostly agree; based on a mix of 27 Buys vs. 2 Holds, the stock claims a Strong Buy consensus rating. The average price target stands at $379.28, suggesting the stock will gain ~10% in the months ahead. (See AVGO stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.