Broadcom (AVGO) Stock: Goldman Sachs Upgrades Target as AI Chip Demand Accelerates

TLDR

• Goldman Sachs increased Broadcom’s price target to $435 from $380, representing a 15% upside
• The stock has climbed 66% in 2025, nearing a $2 trillion market cap
• Custom AI chips (XPUs) for Google and OpenAI now drive 65% of AI revenue
• Q4 earnings expected December 12 with AI chip sales projected at $6.2 billion
• Fiscal 2026 AI revenue forecast to exceed 100% year-over-year growth

Goldman Sachs just made a move on Broadcom. Analyst James Schneider raised the price target from $380 to $435 while keeping his buy rating. That’s a 14.5% increase and represents 15% upside from Tuesday’s close.

Broadcom Inc., AVGO

The timing matters. Broadcom reports Q4 earnings on December 12. Wall Street expects revenue between $17.0 billion and $17.4 billion with earnings around $1.87 per share. The company’s own guidance sits at the high end.

The stock has already soared 66% this year. Over the past 12 months, shares are up 133%. Broadcom is closing in on a $2 trillion valuation. But with that kind of run comes pressure to deliver big results.

Schneider called Broadcom the most important “arms dealer” in the AI boom. The company designs custom AI chips for tech giants. Those chips are becoming the foundation of AI infrastructure.

Custom Chips Drive Growth

Broadcom’s custom AI accelerators, called XPUs, are the growth engine. These specialized chips now account for 65% of the company’s AI-related sales. Google and OpenAI are the biggest customers.

Google’s recent Gemini 3 launch runs on Broadcom-designed TPUs. That partnership is paying off. OpenAI is also placing massive orders for custom hardware.

The AI chip segment should hit $6.2 billion in Q4. That’s up 66% year-over-year and represents more than a third of total revenue. Infrastructure software from VMware adds another $6.7 billion, growing 15%.

Broadcom has a $110 billion backlog. A fourth major AI customer recently committed over $10 billion in orders. The pipeline is strong heading into 2026.

High Expectations for 2026

Goldman expects Broadcom’s fiscal 2026 AI revenue guidance to show more than 100% year-over-year growth. That would prove the custom chip strategy is working at scale.

Schneider highlighted three factors investors are watching. First, the fiscal 2026 AI revenue forecast. Second, how much Google and OpenAI contribute to sales. Third, whether margins hold up as XPU production ramps.

The stock now trades at over 28 times forward sales and 55 times forward cash flows. Those are rich valuations. But Goldman sees Broadcom as more than hype. The firm views it as one of the few companies actually building the hardware everyone else needs.

Schneider’s note acknowledged that expectations are elevated. Google’s strong results with Broadcom chips have raised the bar. When a stock runs this hard, even solid results can disappoint. Investors want a beat, a raise, and a guide that exceeds $11 billion in AI sales.

Goldman’s upgraded price target reflects growing confidence in Broadcom’s partnerships with Google and OpenAI as demand for specialized AI accelerators continues to surge through 2026.

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