According to CNBC, Jefferies just made Broadcom its top semiconductor pick with a bullish $480 price target representing 32% upside. The bank sees “significant upside” driven by exploding demand from hyperscalers like Google, Meta, and OpenAI for Broadcom’s custom AI chips. Google’s monthly token processing has skyrocketed from 480 trillion in April to 1,300 trillion in October, fueling what Jefferies estimates could be $60 billion in additional revenue by 2027. Analyst Blayne Curtis specifically called out Google’s ASIC volumes becoming “much more meaningful” in 2026/2027, with Meta and OpenAI adding material volumes too. This optimism comes as Broadcom shares have already surged 56% year-to-date.
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The AI Hype Train Is Real
Look, there’s no denying the numbers are staggering. Google’s token processing nearly tripling in six months? That’s insane growth by any measure. And when you’ve got Meta and OpenAI both jumping on the custom chip bandwagon, it creates this perfect storm of demand that basically justifies Jefferies’ optimism. The $60 billion revenue upside estimate for 2027 isn’t just pocket change—it’s transformative money.
But here’s the thing: we’ve seen this movie before in tech. Remember when every company was suddenly a “cloud play” or a “mobile-first disruptor”? The AI narrative is equally powerful right now, and it’s lifting all boats in the semiconductor space. Broadcom’s positioning as the go-to for custom AI chips gives them a unique advantage over companies just selling off-the-shelf GPUs.
Reality Check Time
Now let’s talk about what could go wrong. First, that 2026/2027 timeline for “meaningful volumes” feels like forever in tech years. AI demand could cool off, new competitors might emerge, or Google might decide to build these chips in-house—they’ve certainly got the resources. And let’s not forget Broadcom’s stock has already run up 56% this year. How much of this AI optimism is already baked into the current price?
Then there’s the concentration risk. Google driving “the majority of this upside” means Broadcom’s fate is heavily tied to one customer’s AI ambitions. What happens if Google’s AI strategy shifts or they hit technical hurdles? We’re talking about a single point of failure that could derail this entire growth story.
Basically, Jefferies is betting that the AI gold rush has legs. But gold rushes have a way of creating bubbles. The question isn’t whether AI demand is real—it clearly is—but whether these specific projections account for the inevitable speed bumps and market corrections ahead.
