Piper Sandler resumes Broadcom coverage with buy rating
Piper Sandler analysts resumed coverage of specialized chipmaker Broadcom with a buy rating and set a $460 price target. This implies upside potential of more than 25% from the current level, CNBC reports.
AI chips
Piper Sandler called Broadcom a leader in the segment of ASICs — application-specific integrated circuits — for artificial intelligence inference. According to the analysts’ estimate, the company holds 75% of this market, and most major cloud providers and AI labs work with it on ASIC development.
The analysts mentioned Google’s TPU tensor processors as a product currently being supplied in large volumes, as well as Alphabet’s expanded agreement with Anthropic on next-generation TPUs. They also positively assessed the ramp-up in production of Meta MTIA accelerators and OpenAI Jalapeno chips. Broadcom spoke about ties with all three companies at the beginning of the month, when it released quarterly results that exceeded expectations for earnings per share and revenue.
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Competition and supply
On September 3, the day after the earnings report was published, Broadcom shares fell by nearly 3%. Investors were more concerned about the near-term outlook and the company’s forecast for fiscal 2027, which disappointed them. Management explained this by supply constraints.
Since the beginning of 2026, Broadcom shares have risen by less than half of the gain in the S&P 500 index, which added nearly 11%. Piper Sandler considers concerns about Broadcom potentially losing ASIC market share to Marvell, MediaTek and Arm Holdings to be exaggerated. The analysts also positively assess Broadcom’s networking business, which accounts for 30% of the company’s AI chip revenue.
At the same time, Jim Cramer said that his charitable trust substantially reduced its Broadcom position before the quarterly report. He remains cautious due to competition, the company’s growth dependence on data center expansion, and the politicization of artificial intelligence infrastructure development.
