SKN | HSBC Lifts Broadcom Price Target on Expanding AI Chip Demand

Key Takeaways:

• HSBC raised its price target on Broadcom to $600 from $450 while maintaining a Buy rating.
• The firm expects Broadcom’s AI-focused ASIC revenue to accelerate significantly through fiscal 2026 and 2027.
• Major AI customers including Google, Meta, Anthropic, and OpenAI are expected to drive long-term growth.

HSBC Becomes More Bullish on Broadcom

HSBC has significantly increased its price target on Broadcom Inc. following growing confidence in the company’s position within the rapidly expanding artificial intelligence infrastructure market.

Analyst Frank Lee raised the firm’s price target to $600 from $450 while maintaining a Buy rating, reflecting optimism about Broadcom’s custom AI chip business and strengthening demand from some of the world’s largest technology companies.

The upgrade comes as investors continue evaluating which semiconductor companies are best positioned to benefit from the next phase of AI adoption beyond traditional graphics processing units.

ASIC Revenue Growth Drives Optimism

A major component of HSBC’s bullish outlook centers on Broadcom’s application-specific integrated circuit (ASIC) business.

Custom AI accelerators have become increasingly important as hyperscale cloud providers seek alternatives tailored specifically to their workloads. HSBC believes Broadcom’s ASIC revenue growth could materially accelerate beginning in the second half of fiscal 2026 and continue through fiscal 2027 and beyond.

The firm noted that concerns regarding Broadcom potentially losing Google’s custom AI chip business appear overstated. According to HSBC, Broadcom remains positioned to supply Google’s next-generation TPU v7 processors, which are expected to command higher average selling prices than the current generation.

Expanding Customer Base Supports Long-Term Growth

Beyond Google, HSBC highlighted several major AI customers that are expected to contribute to future growth.

Meta Platforms continues expanding its custom AI chip initiatives, creating another significant revenue opportunity for Broadcom.

In addition, Anthropic and OpenAI have reportedly entered multi-year gigawatt-scale deployment agreements with Broadcom that are expected to begin contributing to revenue during fiscal 2026 and fiscal 2027.

These agreements reinforce Broadcom’s growing role as a critical supplier within the global AI infrastructure ecosystem.

Capacity Expansion Signals Confidence

To support anticipated demand growth, HSBC believes Broadcom has secured additional CoWoS advanced packaging capacity through manufacturing partners including Amkor and ASE.

The firm now estimates Broadcom could utilize approximately 260,000 wafers during fiscal 2026 and roughly 480,000 wafers in fiscal 2027 as AI deployment accelerates.

Reflecting these expectations, HSBC raised its ASIC revenue forecasts to approximately $46 billion for fiscal 2026 and $100.2 billion for fiscal 2027, representing forecasts substantially above broader Wall Street consensus estimates.

Google Supply Concerns Viewed as Overdone

One concern that has circulated among investors is the possibility that Google could move away from Broadcom as a supplier of custom AI processors later in the decade.

HSBC dismissed much of this concern, noting that existing supply agreements between the companies reportedly extend through 2031.

This long-term relationship provides visibility into future business opportunities and reduces uncertainty surrounding one of Broadcom’s most important AI customers.

Outlook

Broadcom continues to strengthen its position as one of the key infrastructure providers powering the artificial intelligence revolution.

With growing demand from hyperscale cloud operators, expanding relationships with leading AI developers, increasing packaging capacity, and long-term customer agreements, analysts are becoming increasingly optimistic about the company’s earnings potential.

Investors will continue monitoring AI infrastructure spending, customer deployment schedules, supply chain capacity expansion, and Broadcom’s ability to convert growing demand into sustained revenue and earnings growth over the coming years.

For a confidential discussion regarding semiconductor investments, artificial intelligence infrastructure opportunities, technology sector positioning, or institutional portfolio strategies, contact our senior advisory team.