HSBC upgrades Broadcom to Buy on ASIC potential

As previously reported, HSBC upgraded Broadcom (AVGO) to Buy from Hold with a price target of $400, up from $240. The firm was previously less bullish as it wanted to see better visibility into the Application-Specific Integrated Circuit customer pipeline and also had concerns about Apple (AAPL) share loss in the wireless segment, but it has turned positive on Broadcom as it now believes the company’s ASIC revenues will significantly beat market expectations from better ASIC project visibility as well as pricing power, the analyst tells investors. The firm believes Broadcom’s ASIC revenue potential for FY26-FY27 is still undervalued given increasing hyperscaler AI server capex allocation toward ASIC projects from 2% in FY23 to 14% in FY27, the analyst added.