Broadcom's $7.74 Billion Volume Secures 8th-Highest Rank Amid AI-Driven Rally

Market Snapshot

Broadcom (AVGO) closed 2025-12-03 with a 0.25% decline, trimming its year-to-date gains. The stock’s trading volume reached $7.74 billion, securing the 8th-highest rank in U.S. markets for the day. This follows a 74% rally in 2025, driven by strong demand for AI-related hardware. Despite the pullback, the stock remains within an ascending wedge pattern, with technical analysts noting key support levels near $350 and potential resistance at $433 ahead of its December 11 earnings report.

Key Drivers

Morgan Stanley’s recent price target revisions for Broadcom and Nvidia underscore the semiconductor sector’s strategic positioning amid surging AI demand. The firm raised its price target for AVGO to $443 from $409, citing robust growth in Broadcom’s tensor processing unit (TPU) ecosystem. Analysts highlighted that Google’s TPU supply chain, designed and sold by Broadcom, is seeing upward revisions in unit builds, particularly for 2027. This aligns with broader industry trends, where cloud providers face supply constraints in high-bandwidth memory and advanced wafer production, intensifying demand for AI hardware.

The firm emphasized that Broadcom’s AI revenue growth is accelerating beyond initial estimates. Management anticipates AI revenue to outpace the 50–60% year-over-year growth forecast for fiscal 2025, driven by strong demand for custom accelerators from three major hyperscalers and a fourth client in rapid expansion. This growth trajectory is supported by Broadcom’s VMware Cloud Foundation platform, which is now widely adopted by AI labs and hyperscalers for large-scale workloads. Morgan Stanley noted that while Google’s TPU is a strong alternative to Nvidia’s offerings, Broadcom’s role in enabling TPU deployments positions it as a critical player in the AI infrastructure landscape.

Supply chain constraints further amplify Broadcom’s strategic advantage. The bank’s analysis indicates that AI hardware demand is straining semiconductor capacity, with customers prioritizing access to products like Broadcom’s TPU and Nvidia’s Vera Rubin platform. Analysts warned that these constraints are likely to persist through 2026, creating tailwinds for companies with established AI-related revenue streams. For Broadcom, this translates to sustained momentum in its ASIC (application-specific integrated circuit) revenue, projected to reach $27.2 billion in 2026 and $59.5 billion in 2027.

However, the firm also flagged potential long-term risks, including Google’s development of a homegrown TPU in partnership with MediaTek. While this initiative is not expected to disrupt Broadcom’s near-term growth, it could alter the competitive dynamics in the TPU market. Morgan Stanley acknowledged this risk but maintained its overweight rating for AVGO, citing the company’s diversified AI exposure and leadership in CoWoS (Chip on Wafer on Substrate) technology. The bank’s upgraded forecast assumes 3.2 million CoWoS units in 2026 and 5 million in 2027, reflecting confidence in Broadcom’s ability to scale production amid tight capacity.

The earnings report on December 11 is positioned as a pivotal event for the stock. Management’s guidance for Q4 fiscal 2025, which projects $17.4 billion in revenue (a 25% sequential increase), will provide clarity on AI-driven growth and supply chain challenges. Analysts noted that Broadcom’s Q3 results already demonstrated the sector’s resilience, with AI semiconductors contributing $5.2 billion to revenue—a 63% year-over-year increase. This performance, coupled with Morgan Stanley’s revised targets, reinforces the view that Broadcom is well-positioned to capitalize on the AI super-cycle, even as macroeconomic uncertainties persist.

Strategic Positioning in AI Infrastructure

Broadcom’s role in the AI ecosystem extends beyond TPUs, with its high-speed Ethernet networking products and VMware Cloud Foundation platform becoming critical components for hyperscalers. The firm highlighted that these solutions are now standard for handling large-scale AI workloads, a trend that is expected to accelerate as enterprises adopt hybrid cloud architectures. Morgan Stanley’s analysis also pointed to Broadcom’s competitive positioning against rivals like Nvidia, noting that while Nvidia dominates the AI accelerator market, Broadcom’s TPU business is gaining traction in specific applications.

The bank’s report underscored that Broadcom’s revenue diversification—spanning data center, networking, and enterprise software—reduces its exposure to cyclical risks. This is particularly relevant given the current environment, where AI demand is outpacing supply and cloud providers are adopting a “gold rush mentality” in procuring memory and server components. Analysts concluded that Broadcom’s ability to deliver high-margin solutions across multiple AI infrastructure layers positions it as a key beneficiary of the sector’s long-term growth, even as short-term volatility persists.