DA Davidson launched coverage of Broadcom Limited (NASDAQ: AVGO) with a Neutral recommendation and a price objective of $335.00. The target sits close to the recent trading level of $331.05, and InvestingPro data cited in the coverage notes that the shares have returned 46.33% over the past year while trading near their Fair Value.
While the research team acknowledged the rising strategic importance of AI-specific chips, the report expressed reservations about how durable Broadcom’s position will be in the application-specific integrated circuit market over the longer term. These reservations come despite Broadcom reporting robust profitability and top-line momentum in its most recent reporting period - gross profit margins of 77.33% and revenue growth of 23.87%.
DA Davidson highlighted that AI ASICs are becoming increasingly relevant for labs and hyperscalers that are focused on workload-specific accelerators. However, the firm warned of potential headwinds for suppliers serving that end market. In particular, DA Davidson pointed to a "potential path for the largest of customers to internalize more of the stack in the next few years," a development the firm said could exert downward pressure on supplier economics in the AI ASIC segment.
On the basis of this analysis, DA Davidson concluded that Broadcom’s exposure to the AI ASIC opportunity does not merit a valuation premium relative to market leaders such as NVIDIA, and that assessment underpins its Neutral stance on the stock.
Other recent analyst positions and company developments
- UBS and Jefferies both reiterated Buy ratings on Broadcom, with price targets of $475 and $500, respectively. UBS emphasized accelerating demand for Broadcom’s TPU products and projected shipments to exceed 5 million units by 2027.
- Jefferies pointed to Broadcom’s positioning in artificial intelligence and networking markets and cited Google’s capital expenditure as a notable endorsement of AI investment.
- Wolfe Research upgraded Broadcom to Outperform, citing anticipated growth in Google’s Tensor Processing Units and the importance of those units becoming available to third parties.
- On the product front, Broadcom announced what it described as the industry’s first Wi-Fi 8 access point and switch solution aimed at AI-ready enterprise networks.
- In a legal development, a German court ordered Renault to halt sales of its Megane and Clio models as a result of a patent dispute with Broadcom over ethernet network cable connections.
Taken together, the analyst commentary and company activity outline a mix of commercial progress, competitive dynamics and legal risk. DA Davidson’s initiation centers on the valuation question tied to AI ASIC exposure, while other firms and recent product and legal actions illustrate the varied forces shaping Broadcom’s strategic position.
Market context and investor considerations
From an investor perspective, the juxtaposition is notable: Broadcom is reporting high gross margins and double-digit revenue growth, yet at least one coverage initiation views those operating fundamentals as insufficient to justify a premium multiple given the potential for large customers to internalize key portions of the AI hardware stack. Meanwhile, other broker notes and product announcements point to tangible demand signals and new product introductions that supporters highlight as growth drivers.
The combination of margin strength, revenue momentum, competitive questions in AI ASICs, product innovation in enterprise networking and an active patent dispute presents a multi-dimensional picture for stakeholders assessing Broadcom’s trajectory.