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- 2 Millionaire-Maker Custom Silicon Stocks Powering the AI Infrastructure Supercycle
The article profiles Broadcom and Taiwan Semiconductor Manufacturing (TSMC) as leading custom-silicon players. Broadcom, which partners with Alphabet on TPUs and counts Meta, OpenAI, and Anthropic among its ASIC customers, reported third-quarter AI semiconductor revenue up 221% to $16.7 billion and net income up roughly 216% to $13.1 billion. It expects fourth-quarter AI revenue to rise 236% to $21.7 billion, and the stock trades at about 28 times expected earnings this year. TSMC manufactures chips designed by its customers and, according to many estimates, controls over 90% of the high-end AI chip market. Its stock has delivered a total return of roughly 4,720% over 15 years. The author notes that both stocks' valuations have been volatile amid AI bubble concerns, while their market positions remain strong.
- Broadcom Drops 6% in a Month: Buy, Sell or Hold the AVGO Stock?
AVGO shares fell 5.8% over the past month, lagging the Zacks Computer and Technology sector's 5.1% decline. The article attributes pressure to gross margin erosion from a rising AI mix, supply constraints, a concentrated AI customer base and weak non-AI business. Non-GAAP gross margin fell 210 basis points to 75% in the third quarter and is expected to be about 73% in the fourth quarter, versus 78% a year earlier. Broadcom forecasts AI semiconductor revenue of roughly $58 billion in fiscal 2026, $115 billion in 2027 and $230 billion in 2028, supported by its Google TPU agreement through 2031 and planned deployments by Anthropic, OpenAI and Meta. Risks cited include reliance on a limited number of hyperscalers and rising competition from NVIDIA, AMD and others.
- Why Broadcom Stock Rallied Tuesday Morning
Broadcom (AVGO) rose as much as 5% on Tuesday and was still up 3.5% at 11:20 a.m. ET, after DA Davidson analyst Gil Luria upgraded the stock and raised his price target to $400 from $350, implying potential upside of 22% from Monday’s close. After reviewing Anthropic’s regulatory filing ahead of its IPO, Luria noted that Broadcom is both a supplier and lessor to the AI start-up, with a non-cancelable five-year lease and deposited funds to secure compute capacity, which provides visibility into part of Broadcom’s future AI chip business. A Wall Street Journal report said CEO Hock Tan lobbied banks and private equity firms to help Anthropic secure $63 billion in financing for TPUs being developed with Google. Broadcom trades at 29 times forward earnings and 17 times next year’s expected earnings, which may look pricey, but the article cites its 0.43 PEG ratio and triple-digit growth as reasons it is reasonably priced.
- Prediction: Broadcom Stock Could Be Worth Twice as Much by 2030
Broadcom's AI semiconductor revenue reached $16.70B, up 221% year over year, and total revenue rose 85.5% to $29.59B, yet the stock is down 6.45% this year at $323.24. The article says shares sit near the 52-week low of $288.95 rather than the high of $493.28, and points to competition from Google's cheaper second sources and a 210 basis point sequential drop in gross margin. The article's model sets a one-year target of $402.33, while the consensus target is $527.59. Reaching $650 by 2030 would require a 101.1% gain, or about 35x the forward EPS of $18.376. The article ties this to AI revenue of roughly $115 billion in fiscal 2027 and $230 billion in fiscal 2028, with management saying fiscal 2028 EPS should exceed $30. The main risk noted is that a few AI labs drive most of the demand.
- Is Broadcom Stock Too Dependent On One Business?
AI chips made up 56% of Broadcom's revenue in fiscal Q3 2026, up from 49% in fiscal Q2, mostly from custom chips for customers such as Google, Meta and OpenAI. AI chip revenue reached $16.7 billion, up 221% year over year, while infrastructure software and other chips grew much more slowly. Management guided fiscal Q4 2026 revenue to $34.8 billion, including $21.7 billion from AI chips, which would be about 62% of sales, though this is a forecast. Adjusted gross margin fell 210 basis points to 75% as AI chips grew in the mix, and management expects about 73% in fiscal Q4 due to more memory in custom chips, while operating income rose 92%. Anthropic is expected to become the largest custom chip customer in 2027 and OpenAI the second largest in 2028, and the stock fell 21.0% from April 27 to October 26, 2026 including dividends, versus a 7.6% gain for the S&P 500.
- Not AMD. Not Marvell. Here's Which Company Nvidia Needs to Be Worried About.
Nvidia leads the AI computing chip market, but the author argues Broadcom, with its custom AI chips, poses a bigger threat than AMD or Marvell. Broadcom's AI semiconductor revenue reached $16.7 billion, while Marvell's AI data center revenue totaled $2.1 billion in Q2. Broadcom has worked with Alphabet for a long time on Google's TPU and also has partnerships with Meta, Anthropic, and OpenAI. Broadcom estimates its AI segment revenue at about $58 billion this year, rising to $115 billion in 2027 and $230 billion in 2028, while Nvidia expects about 70% revenue growth in 2027. At 43 times trailing earnings and 17 times next year's estimates, the author argues the stock does not reflect that growth and considers it attractive.
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