Broadcom (AVGO) Stock: 6% Rally on Google's Massive Spending Plan

TLDR

Table of Contents

Broadcom shares surge 6% after-hours following Alphabet’s announcement of up to $185 billion in capital spending for 2025
Jefferies maintains Buy rating with $500 price target, implying 62% upside from $308.05 current price
Broadcom expected to capture 85-90% of Google’s projected 6 million chip units in 2027, beating MediaTek on v8 and v9 chips
Jim Cramer calls Broadcom “a winner” and recommends buying the dip after 100-point decline from highs
Networking business shows momentum with TH6 ramp and DSP gains potentially outperforming ASIC segment this quarter

Broadcom stock climbed 6% in extended trading Wednesday after Alphabet revealed plans to invest up to $185 billion in capital expenditures this year. The announcement provides a major catalyst for Broadcom’s custom chip partnership with Google.

Broadcom Inc., AVGO

The semiconductor company trades at $308.05 with a market cap of $1.46 trillion. Jefferies holds a Buy rating with a $500 price target.

That target implies 62% upside potential from current levels. The firm cited Google’s spending guidance as a strong vote of confidence in AI infrastructure investment.

Jim Cramer weighed in on the stock during recent commentary. He acknowledged the timing isn’t perfect for entry but emphasized Broadcom’s competitive position.

“This company is a winner in this environment, not a loser,” Cramer stated. He suggested waiting for additional pullback while expressing long-term confidence.

The stock has dropped roughly 100 points from recent highs. Cramer views this decline as a potential buying opportunity given CEO Hock Tan’s consistent execution record.

Google Partnership Drives Growth

Jefferies addressed investor concerns about Broadcom’s custom on-package chip business. The firm confirmed Broadcom maintains a clear technological lead over competitor MediaTek.

This advantage extends to both v8 and v9 chip generations. Jefferies projects Google will order 6 million total units in calendar 2027.

Broadcom should secure 85-90% of that volume. The firm noted potential for higher overall unit numbers.

The company recently launched the first Wi-Fi 8 solution for AI-ready enterprise networks. The platform combines the BCM49438 processing unit with the Trident X3+ BCM56390 Ethernet switch.

Broadcom operates with 77.3% gross profit margins and 23.9% revenue growth. The company provides semiconductor devices and infrastructure software for data centers, telecommunications, and AI applications.

Analyst Upgrades Mount

Multiple Wall Street firms have upgraded their outlook on Broadcom stock. Wolfe Research moved to Outperform based on Google’s Tensor Processing Unit business.

Wells Fargo upgraded to Overweight, citing confidence in catalysts through 2026. RBC Capital initiated coverage at Sector Perform.

Jefferies highlighted strength in Broadcom’s networking division. The segment could outpace ASIC performance this quarter due to the TH6 ramp.

DSP share gains and robust China demand add momentum. The firm’s bottom-up model suggests room for upward revisions to unit projections.

Cramer described Broadcom as one of the more affordable AI plays. He pointed to growth in both software and hardware segments.

The company recently completed a $4.5 billion senior notes offering. Maturities range from 2031 to 2056.

Nvidia shares rose 2% in after-hours trading on the Google news. Memory stocks Sandisk and Micron each gained 4% after Wednesday’s sharp selloff during regular hours.

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