Broadcom shares jump 16%, adding $218 billion to market value

Broadcom shares jump 16%, adding $218 billion to market value

Broadcom (NASDAQ: AVGO) shares surged 16% in premarket trading on Friday, adding $218 billion to the company's market value. The semiconductor giant's stock price climbed from $306.10 to $352.35, marking a significant increase in investor confidence. This surge was driven by the company's announcement of a massive new artificial intelligence deal and optimistic revenue forecasts.

Broadcom secured over $10 billion in AI infrastructure orders from a new customer, with CEO Hock Tan projecting "significantly improved" AI revenue growth for fiscal year 2026. Tan also extended his tenure through 2030, signaling strong leadership continuity as the company capitalizes on the generative AI boom.

The semiconductor company has become a key player in the generative AI boom by designing custom semiconductors for cloud giants seeking alternatives to Nvidia's GPUs. The timing and scale of this deal have fueled speculation that OpenAI is the unnamed customer, following reports that the ChatGPT maker is working with Broadcom to develop custom AI chips.

Broadcom's stock has delivered impressive performance with a 102% return over the past year and currently trades near its 52-week high of $317.35. The company reported strong Q3 2025 earnings with $1.69 EPS, beating forecasts of $1.66, and generated $16 billion in revenue, above the anticipated $15.82 billion.

Multiple investment banks raised their price targets for Broadcom following the announcement. Morgan Stanley increased its target to $382 from $357 while maintaining an Overweight rating. HSBC reiterated a Buy rating with a $400 price target, noting that the latest guidance aligns with their existing Street-high estimate of $30.6 billion for fiscal 2026 ASIC revenue. Both BofA Securities and Barclays raised their price targets to $400, driven by growth in the company's custom AI chip business.

Analysts project $5.1 billion AI revenue for Q3 2025 (60% YoY growth), with 56 "Buy"/"Strong Buy" ratings and $313.63 average price target. The stock's 52-week range spans from $134.90 to $317.35, with recent performance driven by AI semiconductor demand and the company's strategic positioning in custom chip design for major technology companies.

References:
[1] https://tokenist.com/why-did-broadcom-shares-surge-in-premarket-trading-today/
[2] https://www.ainvest.com/news/broadcom-ai-driven-growth-strategic-buy-hyperscaler-momentum-2508/