Broadcom (NASDAQ: AVGO) stock is down 2.41% year-to-date, contrasting sharply with the S&P 500's 12.87% gain. The divergence reflects a market mispricing: AI semiconductor revenue reached $16.70 billion in fiscal Q3, driving overall revenue to $29.59 billion, an 85.5% year-over-year increase. We project Broadcom can reach $700 per share by 2030, representing 108.8% upside from its current price of $335.18.
Q3 gross margin was 75% of revenue, a 210 basis point sequential decrease. Management guides Q4 gross margin to approximately 73%, attributing the dilution to a mix heavy in memory-intensive XPUs. Despite margin pressures, Broadcom's forward price-to-earnings ratio stands at 18x—inexpensive for a company posting 96% year-on-year non-GAAP EPS growth in Q3.
CEO Hock Tan said the vast majority of current compute demand for AI workloads comes from a concentrated group developing frontier models. He described Q3 demand as "simply hot" and said the company is "just getting started." Management anticipates AI semiconductor revenue will double to $115 billion in fiscal 2027 and reach $230 billion in fiscal 2028.
This growth is backed by major deals, including multi-tens of billions of dollars annually from Alphabet's Google TPU agreements. OpenAI deployments are expected to exceed five gigawatts in 2028, further fueling demand for Broadcom's custom silicon.
Wall Street analysts hold a nearly unanimous bullish stance. The consensus price target is $527.59, implying 57.4% upside. This includes seven strong buy ratings, 40 buy ratings and three holds, with zero sell recommendations.
Our base case for Broadcom in one year is $410.50, representing 22.47% upside, within a range of $365.37 to $534.68. However, we believe this projection is too conservative.
Reaching our $700 target by 2030 requires a forward price-to-earnings ratio of 38x, based on forward EPS of $18.376. The additional multiple expansion is primarily driven by earnings growth. Tan stated explicitly that Broadcom is "very much on target to exceed $30 in earnings per share in fiscal 2028." At that EPS figure, a $700 stock would trade at just 23x earnings, demonstrating the conservative nature of our $700 target given management's projections.
Our bull case reaches $870.61 per share by 2030. The primary risk to these projections is supply chain constraints—specifically potential shortages of wafers, high-bandwidth memory, power or data center shells—which could delay deployments.
Broadcom shares have fallen 5.3% over the past week and 5.9% over the past month. The stock's beta of 1.476 indicates it moves more significantly than the broader market in both directions. The 52-week trading range for AVGO is between a low of $288.95 and a high of $493.28.
Over the past 10 years, Broadcom has delivered a 2,396.48% return, substantially outperforming the S&P 500's return of 259.69% during the same period.
