Macquarie has upgraded Broadcom to outperform, citing accelerating demand for AI compute capacity that is expected to drive more than $40 billion in orders from Anthropic in fiscal 2028.
The upgrade follows a 24% decline in Broadcom shares from their 2026 peak, as investors weighed the impact of reduced orders from Google. Macquarie’s Arthur Lai noted that the risk of Google bringing chip production in-house has largely materialized, with the tech giant’s direct investment in MediaTek already reflected in Broadcom’s valuation. The analyst also highlighted that Broadcom’s stock pullback has reduced the perceived threat of insourcing.
Broadcom reported a 33% quarter-on-quarter revenue increase to $29.6 billion in the third quarter, though gross profit margin slipped 2 percentage points to 75.0%. Net profit still exceeded Macquarie’s estimate by 4%, supported by stronger-than-expected software revenue. The company’s diversification across six major XPU customers is reducing reliance on any single client, with OpenAI projected to become the second-largest XPU customer by fiscal 2028.
Macquarie raised its fiscal 2028 earnings forecast by 12%, while maintaining its 2027 estimate. The price target was lifted by 12% to $490, implying a total shareholder return of about 35%. Lai emphasized Broadcom’s dominance in the AI ASIC market and its long-term edge in custom silicon, alongside margin resilience from its software business.
Meta is also expected to contribute, with plans to ship three generations of its MTIA chip, further diversifying Broadcom’s revenue base.
