Remember when buying a stock felt like catching a falling knife in the semiconductor space just a couple of years ago? Yeah, me too. Fast forward to the end of 2025 and one name keeps showing up in every conversation about the next big winner: Broadcom.
Something big just happened that caught my eye this morning. One of Wall Street’s heaviest hitters raised their price target on the stock in a move that feels less like routine housekeeping and more like someone who just saw the order book for next year.
Why Goldman Sachs Just Raised Its Target to $435
Let me paint the picture. The analyst community already loved Broadcom – almost everyone has a buy rating – but when a firm moves their target from $380 to $435 literally two weeks before earnings, people sit up and listen.
That new target implies roughly 13% upside from where the stock closed on Tuesday. Not exactly pocket change when we’re talking about a company already worth hundreds of billions.
So what changed? In a word: confidence. Confidence that the AI boom isn’t slowing down anytime soon, and Broadcom is sitting in the sweet spot.
The AI Revenue Rocket Nobody Wants to Get Off
Here’s the part that actually made me stop scrolling. The new forecast calls for Broadcom’s AI-related revenue to hit $45.4 billion in fiscal 2026. That’s not a typo – we’re talking about more than doubling from where most people thought the run rate would be a year ago.
And they’re not stopping there. The following year, 2027, could see that number climb to $77.3 billion. If those numbers hold, we’re looking at one of the fastest ramps in tech history.
“We expect sustained AI strength… with 1Q guidance above the Street given robust spending at key customers.”
When analysts start talking like that ahead of earnings, it usually means they’ve been on the phone with the big hyperscalers and heard things that haven’t hit the tape yet.
The Google Connection Everyone Is Watching
Let’s be honest – a huge chunk of Broadcom’s custom silicon business comes from one very large customer whose name rhymes with “oogle.” The recent launch of their latest Gemini model only reinforced how serious they are about building their own AI accelerators.
Broadcom isn’t just selling chips. They’re co-designing the next generation of XPUs – those custom processors that live inside the biggest cloud data centers on earth. And when your partner announces a new model that supposedly crushes everything else on certain benchmarks, well, the order backlog tends to get interesting.
- More AI training clusters coming online
- Inference demand exploding as models go live
- Every major cloud provider racing to catch up
- Custom designs locking in multi-year revenue
In my experience, when the lead customer starts spending even more aggressively, the rising tide lifts the entire custom silicon boat. And right now that boat has Broadcom written all over it.
Yes, Margins Will Take a Hit – But That’s Actually the Plan
Here’s where some investors get nervous, and honestly, I get it. The custom XPU business is fantastic for revenue, but it comes with lower gross margins than Broadcom’s traditional networking chips.
The analyst note actually calls this out directly – they expect gross margin dilution as the custom business ramps to over 160% growth next year. That sounds scary if you only read the headline.
But dig a little deeper and something interesting happens. The operating margin story actually improves over time because of the sheer scale and because these deals come with software and IP licensing that carries very high margins.
Think of it like this: you’re trading some gross margin points today for a decade of essentially guaranteed revenue tomorrow. I’ve seen this movie before with other platform shifts, and the companies that win are usually the ones willing to make that trade.
What the Chart Is Telling Us Right Now
Let’s zoom out for a second. Year-to-date, Broadcom shares are already up roughly 66%. That’s not exactly screaming “undiscovered gem” anymore.
But here’s what catches my attention: the stock is up 13% just this week. That kind of short-term momentum usually means something is leaking out – whether it’s channel checks, supplier chatter, or institutional investors positioning ahead of the print.
The technical picture looks remarkably clean too. The stock just broke out of a multi-month consolidation and is now trading above all the major moving averages. Volume has been strong. Breadth in the semiconductor space remains constructive.
In other words, everything is lining up.
The December 11th Earnings Call – What Actually Matters
Mark your calendar. Two weeks from now we get the moment of truth.
Here are the three things I’ll be listening for:
- How aggressive is the FY26 AI revenue guidance? Anything north of $40 billion would be massive.
- What do they say about 2027 visibility? The Street is only just starting to model that year.
- Any color on margin progression as the mix shifts – can they expand operating margins even with gross margin pressure?
If management sounds even half as confident as the Goldman note suggests, this stock could run hard into year-end.
The Bigger Picture for Semiconductor Investors
Perhaps the most interesting aspect – at least to me – is what this says about the AI capex cycle. We keep hearing debates about whether the build-out is slowing down. Every time someone predicts peak spending, another trillion-dollar company announces they’re doubling their AI infrastructure budget.
Broadcom sits at the intersection of several powerful trends:
- The shift from general-purpose GPUs to specialized accelerators
- The hyperscalers bringing more chip design in-house
- The explosion of inference workloads that need custom silicon
- The networking upgrade cycle that accompanies every new AI cluster
When you have that kind of multi-year tailwind, trying to pick the exact top becomes a dangerous game.
I’m not saying Broadcom can’t have pullbacks – everything does eventually. But the fundamental setup here looks about as good as it gets in tech investing.
Sometimes the best trades are the ones that feel almost too obvious. Right now, Broadcom feels like one of those names.
Look, nobody has a crystal ball. But when one of the smartest firms on the Street moves their target 15% higher two weeks before earnings and basically says “we think AI revenue doubles again next year,” it’s probably worth paying attention.
The stock isn’t cheap anymore. It never really was during this run. But growth stories of this magnitude rarely are.
December 11th is going to be fun.
