Broadcom jumps 5% as JPMorgan backs AI growth with $580 target

Key Takeaways:

JPMorgan reiterated Overweight on Broadcom with a $580 price target
Google TPU v9 program is on track, extending AI revenue visibility through 2031
Broadcom shares rose 5.17% on Wednesday after the analyst note

Broadcom Inc. shares jumped 5.17% on Wednesday after JPMorgan reiterated its Overweight rating and $580 price target, arguing the market is underestimating the company's long-term artificial intelligence opportunity.

"The market continues to underestimate Broadcom's AI upside because of temporary guidance noise," JPMorgan analysts Harlan Sur and Mayur Ramdhani wrote in a note. The bank said it "would be aggressive buyers at current levels" given Broadcom's dominance in advanced chip packaging design, intellectual property portfolio and execution track record.

The $580 price target implies roughly 54% upside from Tuesday's closing price. Broadcom shares traded at $398.36, still about 17% below their record closing high of $481.57 reached on June 2. The stock has gained 13% year to date and 58% over the past 12 months, though it fell 14% in June after guidance disappointed investors and triggered a selloff across AI-related semiconductor stocks.

JPMorgan dismissed concerns that Google's next-generation TPU v9 chip program has been delayed or canceled, stating that "contrary to the recent noise from sell-siders," the Broadcom team remains on track to ramp production. Google signed a five-year agreement with Broadcom in March covering the next four generations of Tensor Processing Units, providing AI revenue visibility through 2031, according to reports cited by Futunn News. Broadcom has helped Google bring 14 advanced chip designs to market over the past 12 years.

The company designs custom AI chips for six major customers, including Alphabet and OpenAI, and has outlined a goal of generating $100 billion in AI chip revenue by 2027. Its total corporate backlog has reached approximately $162 billion. Wall Street remains overwhelmingly bullish: 51 of 55 analysts covering Broadcom rate the stock a Buy, with an average price target above $500 per share, according to FactSet.

The JPMorgan upgrade reinforces confidence in Broadcom's AI pipeline at a time when the broader semiconductor complex is recovering from a June selloff. Investors will watch for the company's next earnings report for updated segment margins and any further color on the Google TPU ramp timeline.

This article is for informational purposes only and does not constitute investment advice.