Goldman Sachs revamps Broadcom stock price target

Goldman Sachs revamps Broadcom stock price target with a twist

Broadcoms (AVGO) stock looks virtually unstoppable, having jumped over 66% year-to-date as it moves ever so close to a $2 trillion valuation.

However, with such momentum comes a new kind of pressure.

Goldman Sachs analyst James Schneider just bumped his price target on the stock, doubling down on his buy rating.

He frames Broadcom as perhaps the most important arms dealer in the AI boom.

At the same time, he makes it clear that expectations for Q4 remain sky-high. Investors want a strong beat, a raise, along with a healthy fiscal 2026 guide that tops the expected $11 billion+ in AI sales.

Hence, even though Broadcom could be winning the AI hardware race, Schneiders note underscores the challenge ahead that when a stock runs this hard, even great results can be disappointing.

A bet on Broadcoms AI engine

Schneider bumped Broadcoms price target from $380 to $435 (14.5% increase), as it heads into Q4 with a setup thats too strong to ignore.

In the note, he talked about three areas that investors care about the most.

These include the companys AI revenue guidance for 2026, the sales contribution from Google and OpenAI, and whether it can maintain its lofty margins as its custom XPU business continues to grow at an incredible pace.

Moreover, Schneider mentions that expectations remain elevated, especially with the strong peer results, particularly from Googles latest Gemini 3 launch, relying heavily on Broadcom-designed TPUs.

Its worth mentioning that following its ascent, Broadcom stock now trades over 28-times forward sales and 55-times forward cash flows.

Nevertheless, Goldman sees Broadcom less as a beneficiary of AI hype and more as one of the few businesses building out the hardware foundation on which everyone else relies.

Broadcoms high-bar Q4 setup

Broadcom heads into Q4 with Mr. Market expecting another rock-solid performance, spearheaded by a fast-growing AI semiconductor business.

Consensus estimates indicate earnings of approximately $1.87 per share on sales of $17.0$17.4 billion.

Broadcoms own $17.4 billion guide sits near the top of that range. Naturally, the tech giants AI chip segment is its most important catalyst, which is projected to hit $6.2 billion in Q4, up 66% year over year, while accounting for more than a third of total sales.

Infrastructure software, led by VMware, is also expected to add $6.7 billion, growing at a superb 15%.

Additionally, with a record $110 billion backlog, along with a newly revealed fourth major AI customer placing $ 10 billion+ in orders, investors see robustness rolling straight into next year.

Google OpenAI: Broadcoms quiet XPU/TPU advantage

Broadcoms AI story is all about how its quietly built the engineering backbone for businesses, effectively defining the AI race.

At its core are Google and OpenAI, two hyperscalers for whom Broadcom is the preferred ASIC design partner in developing custom AI accelerators, known as XPUs.

For perspective, these potent new chips now account for an incredible 65% of the companys AI-powered sales.