Analysts Expect Higher TPU Shipments. Why That Makes Broadcom Stock a Buy Now.

Broadcom (AVGO) is a global technology powerhouse headquartered in Palo Alto, California, specializing in the design and supply of complex semiconductor and infrastructure software solutions. The company has strategically positioned itself as the essential partner for hyperscalers like Alphabet (GOOGL) and Meta Platforms (META), co-designing custom AI accelerators such as the Tensor Processing Unit (TPU).

Beyond hardware, Broadcom’s massive $61 billion acquisition of VMware in 2022 has transformed it into a software leader, providing mission-critical virtualization and private cloud platforms. Broadcom serves as a "backbone" for the modern AI data center and global telecommunications.

Broadcom Stock Gains Momentum

AVGO stock has delivered a remarkable 73% return over the past year, despite its recent 25% pullback from the 52-week high of $414.61. This retreat, driven by broader macro concerns and a rotation out of expensive tech names, has pushed Broadcom's 14-day Relative Strength Index (RSI) to 41. Despite the volatility, Broadcom’s record $73 billion AI backlog provides a stable floor for long-term growth-oriented investors.

In comparison to the S&P 500 Information Technology Index ($SRIT), Broadcom has historically acted as a high-beta outperformer, though it has recently tracked the index's roughly 10% year-to-date (YTD) decline.

Broadcom Posted Strong Results

Broadcom started fiscal 2026 with record-breaking results, reporting first-quarter revenue of $19.31 billion, a 29% increase year-over-year (YOY) that exceeded Wall Street estimates. The primary catalyst was a staggering 106% surge in AI semiconductor revenue, which reached $8.4 billion and now accounts for a significant portion of the company’s hardware sales. This growth was fueled by the rapid deployment of custom AI accelerators and Tomahawk 6 Ethernet switches. The company achieved a record non-GAAP gross margin of 77% in Q1 and reported non-GAAP diluted EPS of $2.05, surpassing the forecast of $2.02.

Looking forward, CEO Hock Tan provided a highly bullish outlook, guiding for Q2 revenue of $22 billion, which represents 47% YOY growth. This acceleration is expected to be driven by a 140% jump in AI revenue to $10.7 billion next quarter.

The integration of VMware continues to be a cash-flow engine, contributing to adjusted EBITDA of $13.1 billion (68% of revenue) and free cash flow of $8 billion. Backed by a new $10 billion share repurchase program, Broadcom is leveraging its monopolistic position in AI networking to target over $100 billion in annual AI chip revenue by fiscal 2027.

Analysts Bullish on Broadcom

GF Securities recently reiterated a “Buy” rating on Broadcom, significantly raising its price target to $450. That reflects potential upside of 45% from the current market rate. The upgrade is fueled by an upward revision in shipments for Google’s Tensor Processing Units. Analysts now expect total TPU shipments to hit 4.5 million units in 2026 and jump to 7.9 million by 2027, largely driven by external sales.

Broadcom is positioned as the primary winner of this momentum, especially as its specialized Ironwood and Sunfish models are already entering customer testing. Furthermore, the complexity of next-generation designs like Pumafish is expected to drive average selling prices above $20,000 per unit by 2027. This combination of surging volume and higher pricing reinforces Broadcom’s dominant role in the AI infrastructure landscape.

Should You Buy AVGO Stock?

Broadcom remains a premier AI infrastructure play, solidified by surging TPU shipments and its industry grip on custom silicon for giants like Google. This dominant market position is reflected in a "Strong Buy" consensus rating from 42 analysts, including 36 "Strong Buy" ratings and three "Moderate Buy" ratings. The mean price target of $466.65 suggests massive potential upside of 50% from current levels.

For investors seeking a high-margin "backbone" of the AI revolution, Broadcom’s record $73 billion backlog and expanding custom chip portfolio present a compelling long-term opportunity.