Jefferies names Broadcom new Top Pick as ASICs are 'at an inflection point'

Investing.com -- Jefferies named Broadcom its new Top Pick, saying the chipmaker is “at an inflection point” as demand for custom AI chips surges across hyperscalers. The broker raised its price target to $480 from $415 and designated the stock as a Franchise Pick, citing “outsized upside relative to estimates.”

Analysts said Broadcom’s Application-Specific Integrated Circuit (ASIC) business is set for rapid growth as Google, Meta, and OpenAI ramp their own AI accelerators.

“We return to AVGO as our top pick as we see the larger upside to estimates as ASICs hit an inflection point,” analysts led by Blayne Curtis wrote.

Their checks suggest Google’s Tensor Processing Unit (TPU) volumes will climb sharply, with 2026 shipments nearing 3 million units, supported by Anthropic’s new $10 billion order for about 250,000 units and potential follow-ons.

Analysts model Broadcom’s AI-related revenue reaching $10 billion in calendar 2027 (C27), but said it “could easily scale to $40-50B per year in C28+” as hyperscaler buildouts accelerate. Meta is expected to ramp its first AI chip with high-bandwidth memory (HBM) in the third quarter of 2026 and introduce an OpenAI ASIC later that year.

The analysts raised Broadcom’s 2026 and 2027 revenue forecasts to $100 billion and $130 billion, respectively, and lifted EPS estimates to $10.31 and $13.88.

“We expect numbers will have to continue marching higher and see step function estimate revisions upward over the next year. Given the significant upside to numbers, we are making AVGO our top pick,” they said.

Jefferies said its upside case implies EPS of $20 in 2027 and potentially $30 in 2028 if OpenAI’s capacity ramps by 2–3 gigawatts annually.

With Broadcom moving to the top of its list, Jefferies removed Nvidia from its Franchise Picks, though it reiterated a Buy rating and raised its target to $240 from $220.

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