Broadcom Shares Maintain Strong Outlook as UBS Highlights Accelerating AI Chip Demand

UBS has reiterated its confidence in Broadcom, maintaining a bullish stance driven by the company's central role in the artificial intelligence infrastructure build-out. The investment bank's analysis points to a faster-than-anticipated acceleration in demand for custom silicon, a trend largely fueled by major cloud service providers rapidly scaling their chip roadmaps for AI data centers.

In a recent research note, UBS strategists have reaffirmed their Buy rating on the semiconductor giant. The firm has set a price target of $475 for Broadcom shares. This optimistic valuation is supported by significantly raised earnings per share (EPS) projections, reflecting the strength of the AI-driven custom compute segment:
- 2026 EPS estimate: approximately $12.70
- 2027 EPS estimate: approximately $18.00
- 2028 EPS estimate: approximately $22.50

These updated forecasts underscore UBS's view that Broadcom's AI revenue cycle represents a multi-year growth opportunity rather than a short-term spike.

Custom Silicon Orders Ramp Up Steeply

Analysts, including Timothy Arcuri at UBS, note a "steeper ramp" for Tensor Processing Units (TPUs) and application-specific integrated circuits (ASICs). Visibility into order books for this custom silicon has improved substantially. The bank's supply chain checks and customer roadmap analysis project shipments of roughly 3.7 million TPU units in 2026, climbing to over 5 million units by 2027.

This surge is primarily driven by hyperscalers, with Google cited as a key example, aggressively expanding their proprietary chip development plans to support the training and deployment of large language models (LLMs).

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Balancing Cyclical Headwinds with AI Strength

While the AI segment shows exceptional promise, UBS acknowledges cyclical challenges in other areas of Broadcom's portfolio, such as its broadband business. However, the bank believes the robust growth in custom compute will more than offset these softer segments. This dynamic reinforces the investment thesis that Broadcom is well-positioned to navigate mixed semiconductor end-markets.

Expanding AI to the Network Edge and Upcoming Catalyst

Beyond data center chips, Broadcom is also targeting AI expenditure at the network edge. The company recently introduced the industry's first Wi?Fi 8 access point solution, powered by its BCM49438 chip. This platform is designed to deliver low latency and high bandwidth for enterprise networks, representing another avenue for growth.

Broadcom's stock is currently trading near $340, having experienced the sector-wide volatility common to semiconductor equities. Investors are now looking ahead to the next significant catalyst: the quarterly earnings report scheduled for early March. Market participants will scrutinize management's commentary, particularly regarding the AI revenue outlook and progress on integrating the recently acquired VMware business.

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