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HSBC Upgrades Broadcom to Buy, Shares Gain 3%

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Broadcom (NASDAQ:AVGO) shares rose more than 3% intra-day today after HSBC upgraded the company from Hold to Buy and raised its price target to $400, citing a sharp upward revision in its outlook for the company’s custom ASIC business—driven by accelerating AI infrastructure spending.

Following Broadcom’s Q2 2025 earnings call, consensus estimates for ASIC revenue in 2026 and 2027 were raised significantly. However, HSBC argues that even these bullish revisions still underestimate the company’s true potential. The firm expects ASIC revenue to grow much faster than the broader AI GPU market, fueled by a surge in hyperscaler investment in custom silicon—from just 2% of AI server capex in 2023 to an estimated 14% by 2027.

Additionally, HSBC notes a trend toward larger ASIC die sizes, which command significantly higher prices. As a result, the firm now expects blended average selling prices for ASICs to climb 92% year-over-year in 2026 and another 25% in 2027.

Reflecting this view, HSBC has sharply raised its own ASIC revenue projections for Broadcom to $28.4 billion in 2026 and $42.8 billion in 2027—42% and 69% above current Street estimates, respectively.

Given this potential, HSBC believes Broadcom’s current valuation fails to fully reflect the magnitude of its AI-driven ASIC growth, prompting the upgrade to Buy and a more bullish price target.

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