Broadcom (AVGO) Stock: CEO's $660 Million AI Incentive Package Drives All-Time Highs

TLDR

Table of Contents

Broadcom stock hit record highs near $370 after CEO Hock Tan received a massive AI-focused incentive package worth up to $660 million
The compensation plan requires Broadcom to reach $90-120 billion in AI revenue by 2028-2030, compared to expected $20.2 billion in fiscal 2025
J.P. Morgan’s top analyst maintains Broadcom as his top semiconductor pick with a $400 price target, citing strong AI momentum
Despite CEO stock sales worth $50 million in September, analysts view the incentive package as a bullish signal for AI growth
Early recovery signs appear in non-AI semiconductor segments, while VMware business continues steady expansion

Broadcom shares surged to record territory after the chip giant unveiled a massive incentive package for CEO Hock Tan. The compensation plan ties directly to the company’s AI revenue growth targets.

On September 10, Broadcom stock jumped nearly 10% to close near $370. This marked the highest closing price in the company’s history. The surge came after regulatory filings revealed details of Tan’s new compensation structure.

The incentive package could be worth over $660 million if Broadcom hits specific AI revenue milestones. Tan would receive 600,000 shares if the company generates $90 billion in AI revenue during any 12-month period between fiscal 2028 and 2030. The reward would triple if AI revenue exceeds $120 billion.

Using Broadcom’s current stock price around $361, the base award equals approximately $220 million. The maximum payout could reach $660 million. This creates powerful financial motivation for Tan to drive AI revenue growth.

Broadcom expects to generate $20.2 billion in AI revenue for fiscal 2025. To reach the $90 billion target by fiscal 2028 would require a compound annual growth rate of 65%. This matches the 66% AI revenue growth expected next quarter.

Wall Street Endorsement

J.P. Morgan’s five-star analyst Harlan Sur recently reinforced his bullish stance on Broadcom. Following discussions with CFO Kirsten Spears at the US All Stars Conference in London, Sur maintained his Overweight rating. He set a $400 price target, implying 15% upside.

Sur highlighted Broadcom’s position as the “technology leader” in AI chips. The company plans to tape out its first-generation 2nm/3.5D package AI XPU products this year. This puts Broadcom ahead of merchant GPU competitors.

Spears emphasized that AI demand remains exceptionally strong. Each customer engagement could potentially scale to one million XPU AI clusters. The company is also expanding beyond silicon to deliver full AI rack-scale deployments.

CEO Stock Sales Create Mixed Signals

Despite the bullish incentive package, Tan sold 148,154 shares on September 10. The sale was worth just under $50 million at $336.67 per share. This discretionary sale occurred before the stock’s surge that day.

However, Tan’s 2025 stock sales appear less concerning in context. He has sold around 346,000 shares worth $101 million this year. This compares to over 702,000 shares worth $110 million from December 2023 to December 2024.

The reduced share count suggests Tan is cutting his ownership percentage by a smaller amount. This provides a purer measure of insider sentiment than dollar values alone.

Recovery Beyond AI

Broadcom sees early recovery signs in non-AI semiconductor segments. Bookings are increasing in broadband, server storage, and enterprise networking. Revenue recovery follows a U-shaped path with potential acceleration entering fiscal 2026.

The VMware business continues expanding at a steady pace. The VCF platform conversion should finish by the end of fiscal 2026. Sur expects continued strong double-digit growth before settling into mid-to-high single digits.

Broadcom plans to reinvest in AI growth opportunities while maintaining discipline. The company will return 50% of free cash flow to shareholders and prioritize debt reduction.

Wall Street maintains strong conviction in Broadcom’s prospects. The stock holds a Strong Buy consensus rating from 27 Buy recommendations versus 2 Holds. The average price target stands at $379.28, suggesting 10% upside potential.

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