Broadcom (AVGO) stayed in the spotlight this week after Morningstar reaffirmed confidence in the chipmaker’s long-term artificial intelligence trajectory, arguing that its 2028 growth targets remain achievable even as investors have grown increasingly cautious.
The stock has pulled back roughly 27% from its June peak, a slide Morningstar attributes largely to market doubts over whether Broadcom can hit its own guidance — or sustain momentum once it does. Even so, the research firm maintains that underlying demand for AI infrastructure will keep climbing through the end of the decade.
Shares were modestly higher in pre-market trading, putting the stock on pace to end a three-day losing streak.
Morningstar holds firm on its valuation
Morningstar kept its $650 fair value estimate on Broadcom intact and continues to rank the company among its top picks in the semiconductor space. Analysts there believe Broadcom’s 2028 outlook is actually more conservative than what the firm itself expects, and they anticipate AI chip demand staying strong — if not accelerating — over the next two years.
Broadcom has guided for AI semiconductor revenue of roughly $115 billion in fiscal 2027, nearly double this year’s expected $58 billion, with the potential to reach $230 billion in 2028. Morningstar expects a large share of that growth to come from surging demand tied to OpenAI and Anthropic, which the firm says will help Broadcom reduce its reliance on Google as a customer. Its long-standing partnership with Google on custom AI chips (TPUs), meanwhile, is seen as a stabilizing factor for that part of the business.
Recent earnings topped expectations
The confidence comes on the heels of a strong third quarter. Broadcom posted revenue of $29.6 billion, up 86% from a year earlier and slightly ahead of Wall Street’s $29.4 billion forecast, according to data from Fiscal.ai. Per-share earnings of $3.32 also beat estimates, while AI-related semiconductor revenue jumped 221% year-over-year to $16.7 billion. Looking ahead, the company guided fourth-quarter revenue to about $34.8 billion — implying 93% annual growth.
Morningstar isn’t the only firm sticking with a bullish view. BMO Capital lifted its price target on the stock to $575 from $455 while keeping an “Outperform” rating, citing Broadcom’s relationships with six major AI customers and unusually aggressive capacity build-outs from both OpenAI and Anthropic.
Retail traders staying upbeat
Sentiment among retail investors on Stocktwits has held “extremely bullish” over the past day, alongside unusually heavy message activity. One commenter framed Broadcom as far more than just a chipmaker, adding that having strong conviction has made it easier to sit through pullbacks like this one.
Despite the recent drawdown, Broadcom shares remain up more than 3% for the year.
