Broadcom Stock Investors Just Got Fantastic News from Wall Street

Broadcom (NASDAQ:AVGO) has had a stellar run over the past few years, but those gains have been marked by significant volatility. The artificial intelligence (AI) chipmaker has gained 649% since the start of 2023, but has fallen 10% or more on at least nine separate occasions. Furthermore, in early 2025, the stock plunged 41%, so it isn't for the faint of heart.

Some investors have been steering clear of the stock, concerned that AI adoption will slow. However, Wall Street is increasingly convinced that Broadcom's growth story remains intact.

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Wall Street thinks Broadcom is a buy

Broadcom is likely one of the most highly rated stocks on Wall Street, with more than 93% of analysts covering the stock rating it a buy or strong buy. After the company's robust financial report this week, the stock plunged, but a broad cross-section of Wall Street's finest released bullish missives about Broadcom, and there's a recurring theme.

Jefferies analyst Blayne Curtis raised his price target on Broadcom to $550 from $500, while maintaining a buy rating. That represents potential gains for investors of about 31% compared to Thursday's closing price. The analyst argues that despite near-term volatility, the company's growth story is very much on track. He cited large-scale chip deals with Meta Platforms and OpenAI that are set to kick off next year.

Not to be outdone, KeyBanc analyst John Vinh raised his price target on Broadcom to $575 from $500, and maintained an overweight (buy) rating on the stock. That suggests potential upside of 37%. The analyst acknowledged that investors expected Broadcom to significantly raise its full-year guidance, but it didn't -- likely due to supply chain constraints. However, given the backlog of deployments slated for 2027, he believes the company's forecast of $100 billion in AI chip revenue is likely conservative.

JPMorgan analyst Harlan Sur increased his price target to $580, from $500, while maintaining an overweight (buy) rating on the shares. That suggests potential gains of 38% for investors. The analyst crunched the numbers on Broadcom's outstanding contracts and believes the company's fiscal 2028 revenue could approach $300 billion, well ahead of analysts' consensus estimates of $218 billion.

There were plenty of others, but you get the drift. It's worth noting that these price target increases -- and many others -- were issued after Broadcom reported its financial results on Wednesday, and despite the post-earnings sell-off.

Is Wall Street right?

Astute onlookers will note that the recurring theme in these analyst notes is that, despite missing investors' short-term expectations, Broadcom's long-term outlook is bright. I think that's the right way to look at the situation, as the next couple of years are shaping up to be blockbusters for the chipmaker.

Broadcom is playing the long game, having inked major contracts with Alphabet and Anthropic and expanded its existing deal with Meta. The majority of these deals won't be reflected in Broadcom's financial results until late 2027 or early 2028 -- but taken together, they will move the needle.

Wall Street is currently predicting that Broadcom will generate revenue of $106 billion in 2026, and $166 billion in 2027, and $218 billion in 2028, more than doubling its revenue over two years. Some believe those estimates are far too low.

Despite the growing backlog of deals and sizeable opportunity, Broadcom stock is selling for less than 23 times next year's expected sales. Moreover, when measuring its valuation using the price/earnings-to-growth (PEG) ratio -- which is more effective for measuring high-growth stocks -- returns a multiple of 0.55, when any number less than 1 indicates an undervalued stock.

Taken together, the evidence suggests the runway ahead for Broadcom is long, and the stock is a buy.

Danny Vena, CPA has positions in Alphabet, Broadcom, and Meta Platforms. The Motley Fool has positions in and recommends Alphabet, Broadcom, and Meta Platforms. The Motley Fool has a disclosure policy.