Key Takeaways
- AVGO shares finished Tuesday’s session up more than 1%, reaching $389.32
- Hardware stocks attracted investment flows following IBM’s disappointing Q2 guidance
- Morgan Stanley’s Joseph Moore maintained his Buy rating with a $502 price objective
- Analyst estimates Broadcom controls approximately 80% of Google’s TPU chip supply chain
- Consensus rating on AVGO stands at Strong Buy, with average analyst target of $513.29
Broadcom (AVGO) defied broader technology sector weakness on Tuesday, climbing more than 1% to close at $389.32. The upward movement stemmed from two catalysts: a sector rotation favoring hardware manufacturers and renewed analyst optimism from Morgan Stanley.
The catalyst for the software-to-hardware rotation came from IBM’s premature release of second-quarter financial results. The tech giant cautioned that both top-line revenue and adjusted net income would fall short of Wall Street expectations.
IBM’s chief executive Arvind Krishna explained that enterprise clients were reallocating budgets. Organizations were prioritizing expenditures on storage systems, memory components, and server infrastructure instead of software solutions, anticipating price hikes associated with AI data center expansion.
This spending reallocation benefited hardware manufacturers like Broadcom. The semiconductor company produces specialized AI accelerators and networking chips for artificial intelligence applications, positioning it directly in the path of this capital flow.
Year-to-date, AVGO has advanced just 13%, underperforming many semiconductor industry counterparts. The lagging performance stems primarily from investor concerns about one question: how much of Google’s tensor processing unit (TPU) chip production will shift from Broadcom to MediaTek.
Morgan Stanley Reinforces Confidence
Morgan Stanley’s Joseph Moore tackled this concern head-on. He reaffirmed his Overweight (Buy) recommendation on AVGO with a $502 price objective, stating “AVGO remains a core AI winner.”
Moore acknowledged MediaTek’s genuine presence in Google’s TPU ecosystem. Google has strategic incentives to diversify its supplier base, and MediaTek presents a legitimate opportunity in the 3-nanometer TPU generation.
However, Moore views the competitive threat as manageable. He projects Broadcom will maintain approximately 80% of Google’s TPU supply chain over the long term. He characterized concerns about AVGO’s market share falling to 50% or facing complete displacement as “premature.”
His rationale centers on Broadcom’s competitive moats: superior high-bandwidth memory procurement, advanced packaging technology, and manufacturing scale that competitors cannot easily duplicate.
Moore also highlighted that Broadcom has multiple new ASIC (application-specific integrated circuit) clients scheduled to ramp production in late 2027. This diversification provides growth momentum independent of the Google partnership.
Analyst Sentiment
Moore’s bullish stance aligns with broader Wall Street sentiment. The consensus rating on AVGO is Strong Buy, supported by 23 Buy recommendations against only three Hold ratings.
The mean price target stands at $513.29, suggesting approximately 32% appreciation potential from current trading levels.
Moore positions Broadcom as the second-strongest AI semiconductor investment behind Nvidia, driven by its custom chip leadership and networking infrastructure business.
Tuesday’s intraday trading range spanned from $384.71 to $397.24. The 52-week range extends from $273.00 to $495.00, illustrating the significant pullback from recent peak levels.
Morgan Stanley’s analysis was the latest Street commentary on the stock, dated July 15, 2026.
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