Macquarie sees a long runway of solid growth ahead for Broadcom . The bank initiated the semiconductor manufacturer at an outperform rating. Analyst Arthur Lai also implemented a 12-month price target of $420 per share, which signals 17% upside from Friday’s close. Broadcom has soared 55% this year. While the stock trades at a steep premium to the rest of the semiconductor space — 53 times forward earnings versus 29.55 times for the PHLX Semiconductor index — its higher valuation is justified, Lai said. AVGO YTD mountain AVGO YTD chart “We believe Broadcom should trade at a premium to industry peers with 1) strong growth outlook, 2) a strong ~34% dividend CAGR [compound annual growth rate] in recent years, and 3) long-term strategic planning supported by a unique management incentive plan,” he wrote. The analyst highlighted the growth of ASICs, or application-specific integrated circuits, which are outpacing GPUs, or graphics processing units. ASICs are chips used for more specialized purposes than their more broad-use GPU counterparts. Lai wrote that Broadcom currently holds a near-monopoly in AI ASIC and cloud networking solutions. “Broadcom’s ASIC technology is growing faster than GPU. We expect surging demand for ASIC to outpace GPU growth, driven by adoption among hyperscalers and vertical AI markets (eg, auto, healthcare, financial services),” Lai said. “We estimate a 72% global AI ASIC market CAGR over 2025–28, with Broadcom capturing > 70% market share.” Meanwhile, Broadcom’s high-margin software expansion is another positive for the stock. The company’s operating profit margin increased to 66% from 62% after its VMware acquisition. “Its software business enhances long-term margin stability, high-quality free cash flow, and re-rate,” Lai added. ( Learn the best 2026 strategies from inside the NYSE with Josh Brown and others at CNBC PRO Live. Tickets and info here . )
