Broadcom Limited (AVGO) stock got a bullish upgrade from Wolfe Research after the firm raised its rating to Buy from Neutral and set a $400 price target, implying a 21% upside from current levels. The firm’s top analyst Chris Caso said the call reflects fast-growing demand for Alphabet’s (GOOGL) Tensor Processing Units (TPUs).
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“We can no longer ignore the growth and strength of TPUs,” Caso said, adding that checks suggest annual shipments could reach 7 million units by 2028.
Why Caso Upgraded AVGO Stock to Buy
Caso believes Google’s decision to offer TPUs to outside customers marks a major shift in the AI chip market, creating a real alternative to Nvidia’s (NVDA) GPUs and positioning Broadcom as one of the key beneficiaries.
As a result, Wolfe raised its long-term outlook for the company. The firm now expects Broadcom to generate $154.5 billion in revenue and $16 in earnings per share by 2027, reflecting stronger demand for AI-related chips. Caso also noted that there could be further upside from additional AI programs that are not yet fully reflected in current estimates.
Meanwhile, Wolfe increased its 2026 AI chip revenue forecast to about $44 billion, driven by roughly 3.3 million TPU shipments. Looking ahead, the firm now sees 2027 AI revenue rising to $78.4 billion, supported by expected shipments of around 5.1 million units.
Beyond chips, networking is another important growth driver. Wolfe expects AI-related networking revenue to rise 75% in 2026, followed by 55% growth in 2027, as data-center spending remains strong.
Valuation Still Looks Reasonable
Despite the strong rally in AI stocks, Wolfe believes Broadcom’s valuation remains reasonable. Caso said the company is well positioned to benefit from continued growth in AI spending over the coming years.
Is AVGO a Good Stock to Buy?
Turning to Wall Street, AVGO stock has a Strong Buy consensus rating based on 29 Buys, one Hold, and zero Sell ratings. The average AVGO price target is $457.75, implying 38.41% upside potential in 2026.
