Street View: Broadcom set for revenue boost in new chip deal
OpenAI has partnered with Broadcom AVGO.O to produce its first in-house artificial intelligence processors, the latest chip tie-up for the ChatGPT maker as it races to secure the computing power needed to meet surging demand for its services
MULTI-BILLION DOLLAR OPPORTUNITY
** Bernstein ("outperform", PT: $400) says while the exact magnitude of the revenue opportunity remains unclear, it's likely to be over $100 billion for AVGO over the next 3-4 years
** Citigroup ("buy", PT: $415) notes the deal could be worth $100 billion and $8 in earnings-per-share over the next few years
** J.P.Morgan ("overweight", PT: $400) says this deal with OpenAI further increases its confidence in AVGO's ability to deliver above targets
** Wolfe Research ("peer perform") says the deal announcement offers certainty that Broadcom will grow its AI-led revenue in CY 2027, something the company didn't explicitly confirm during its last earnings
** Morgan Stanley ("overweight," PT: $409) says "developing custom accelerators is highly complex, and given the frequent false starts and delays seen across the industry, projecting $10 billion in revenue just 12 months ahead without even having first silicon seemed quite ambitious to us."
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