Broadcom shares have dropped significantly since hitting a record high in early June. Still, most analysts believe that continued AI spending will help the stock recover.
This week, BMO Capital Markets initiated coverage of Broadcom with a positive rating and sees strong potential for the stock to rise from its current level. The firm is confident in Broadcom’s key role designing custom chips for Alphabet and Meta Platforms, as well as its chip supply deals with AI companies like Anthropic and OpenAI.
BMO said Broadcom’s AI business grew 65% in 2025 and expects growth to speed up to 180% in 2026. This suggests the company could see steady expansion and strong profits. BMO is especially positive about Broadcom’s custom chip business, which has grown quickly as AI companies spend more. The firm predicts ASIC revenue will jump to $38 billion in 2026, up from $12.7 billion the year before.
Broadcom shares rose slightly in premarket trading on Friday, but the stock was still down a lot for the week.
On Thursday, Bloomberg reported that Broadcom is talking with lenders to raise over $60 billion in debt for an AI chip financing deal. This could include about $30 billion in junior debt, with Broadcom guaranteeing part of a larger senior-secured loan. Broadcom did not respond to a request for comment.
Broadcom’s stock has struggled lately, dropping sharply from its record high in early June. After a short period of improvement earlier this month, the shares fell again and are now well below their 50-day and 200-day moving averages.
This week, Marvell Technology added to the competition by announcing it gave Google a warrant to buy almost 59 million shares of its stock, a stake worth over $12 billion. This is part of a bigger partnership to develop Google’s custom chips, including its tensor processing units. The deal could challenge Broadcom, which has been Google’s main chip partner and has its own long-term AI chip agreement with Google through 2031.
Even with this competition, BMO’s positive view of Broadcom is common on Wall Street. Most analysts still have a very optimistic outlook and expect the stock to rise much higher from where it is now.
