Key Takeaways
- AVGO shares have declined 15% in the last 30 days and are now hovering near $372, representing a 25% retreat from the peak of approximately $500
- A collaboration between Broadcom and OpenAI has produced “Jalapeño,” a specialized LLM inference chip touted as delivering “substantially better” efficiency per watt compared to existing leading solutions
- Analyst Blayne Curtis from Jefferies maintains a Buy stance on AVGO, characterizing the recent downturn as a “meaningful opportunity,” while Wall Street’s consensus price target stands at $516.91
- A multiyear partnership with Google extends through 2031, potentially delivering revenues surpassing $500 billion across multiple TPU iterations
- Analyst sentiment on AVGO remains overwhelmingly positive with a Strong Buy rating: 24 Buy recommendations versus 3 Hold ratings
The semiconductor giant Broadcom has experienced significant turbulence in recent trading sessions. Following a climb to nearly $500 per share, the stock has retreated dramatically to approximately $372 — marking a substantial 25% correction from its recent zenith. The past 30 days alone have witnessed a 15% decline.
Such pronounced volatility typically captures Wall Street’s attention. Currently, sentiment appears to be shifting toward optimism.
This week, Jefferies’ Blayne Curtis issued a Buy recommendation on AVGO shares, characterizing the recent selloff as creating a “meaningful opportunity” for prospective investors. Curtis, recognized as a 5-star analyst, finds himself among growing company in this perspective.
The strategic timing of his assessment coincides with a significant product launch that may influence Broadcom’s trajectory.
OpenAI Partnership Produces “Jalapeño” Processor
Recently, Broadcom partnered with OpenAI to introduce Jalapeño, a breakthrough custom processor. Representing OpenAI’s inaugural Intelligence Processor, this chip was engineered specifically to optimize large language model (LLM) inference operations.
The inference phase — where AI systems process queries and generate outputs — has grown increasingly critical as organizations like OpenAI transition from pure model development to large-scale deployment scenarios.
According to Broadcom, Jalapeño delivers per-watt efficiency that “substantially exceeds current state-of-the-art” solutions, although the processor remains in validation stages. Should these performance metrics prove accurate, it could establish a compelling competitive advantage for OpenAI and potentially additional AI-focused enterprises in the future.
Strategically, this processor represents significant progress for Broadcom. It demonstrates the company’s capability to engineer bespoke silicon solutions for prominent hyperscale clients extending beyond its established Google partnership.
Curtis emphasized that Jalapeño represents “an important step for AVGO on the road to further customer diversification beyond Google.”
Google Partnership Remains Strategic Foundation
Regarding Google — Broadcom’s collaboration with the tech giant continues serving as a fundamental revenue pillar. The semiconductor company maintains an extended agreement with Google spanning through 2031, encompassing subsequent generations of Google’s TPU (Tensor Processing Unit) architecture.
This arrangement features guaranteed minimum revenue commitments, with aggregate potential exceeding $500 billion through the contract’s conclusion in 2031.
Curtis anticipates Broadcom’s TPU 8i will commence production during Q3 2026. He also minimized concerns regarding competitive pressure from MediaTek, observing that MediaTek’s rival TPU 8t is projected to ship only modest volumes throughout this year.
From a valuation perspective, Curtis conducted scenario modeling positioning Broadcom’s 2028 earnings per share within a $30 to $40 range. At the current $377 price point, this suggests a forward P/E ratio of approximately 10x based on 2028 projections — which he views as attractive for a company possessing Broadcom’s competitive advantages.
Broadcom’s latest quarterly revenue registered at $22.2 billion, reflecting 48% year-over-year expansion. Nevertheless, the stock failed to sustain momentum following the announcement. Current trading multiples exceed 60 times earnings, maintaining elevated market expectations.
Year-to-date, shares remain approximately 9% higher.
The consensus Wall Street outlook on AVGO registers as Strong Buy, comprising 24 Buy ratings alongside 3 Hold positions. The mean analyst price target across coverage stands at $516.91, suggesting potential upside of roughly 37% from present trading levels.
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