Wolfe Upgrades Broadcom (AVGO) on Strong AI Chip Outlook

Broadcom Stock Upgraded on AI Chip Projections

Wolfe Research has upgraded Broadcom Inc. (AVGO) to an "Outperform" rating, driven by increasing confidence in the growth of Google's Tensor Processing Unit (TPU) program. This positions Broadcom as a primary beneficiary in the expanding AI hardware market.

TPU Shipment Growth Fuels Optimism

The upgrade reflects a positive outlook on the artificial intelligence sector. According to channel checks conducted by Wolfe Research, annual shipments of Google's TPUs are projected to reach approximately 7 million units by the calendar year 2028. This significant scale-up indicates a robust demand for specialized AI processors.

Impact on Broadcom's Earnings

Broadcom's role in the TPU supply chain is central to Wolfe's upgraded forecast. The firm believes the scale of the TPU program has reached a point where it will become a substantial driver of Broadcom's future earnings power, allowing the company to capitalize directly on the infrastructure build-out for AI technologies.

Conclusion: A Strategic AI Play

The upgrade highlights Broadcom's strategic importance in the AI ecosystem. Investors will be closely watching the company's performance as demand for AI-specific hardware continues to accelerate, with the TPU partnership serving as a critical growth catalyst for the semiconductor giant.

FAQ

Q: Why did Wolfe Research upgrade Broadcom stock?
A: Wolfe upgraded Broadcom to "Outperform" based on the expected massive growth in Google's AI-focused TPU chip shipments, for which Broadcom is a key supplier.

Q: What is the scale of the projected TPU shipments?
A: Channel checks suggest TPU shipments could reach approximately 7 million units annually by the calendar year 2028.

Source: Investing.com