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Broadcom (NASDAQ:AVGO) remains on track to capitalize on the application-specific integrated circuit, or ASIC, market and networking for artificial intelligence, according to Jefferies.
“The AI ASIC message has stayed consistent: they are targeting major customers building their own LLMs,” said Jefferies analysts, led by Blayne Curtis, in a Monday investor note. “Despite recent concerns, AVGO was clear that they are still deeply engaged with the same customer base and don’t see any future share loss. In the long run, AVGO sees seven major LLM players worldwide (five in US) as the target customer base for ASICs.”
Jefferies also sees potential in Broadcom’s networking solutions, as the scale-up opportunity is likely larger than scale-out.
“The battle has heated up for the scale-up opportunity with Nvidia’s (NVDA) NVLink still the leader, but both AVGO and Astera Labs (ALAB)/UALink working on competing solutions,” Curtis noted. “The opportunity is expected to be 5-10x larger than scale-out and AVGO expects to have solutions using both Tomahawk and Jericho.”
Broadcom is also expected to begin ramping up Google’s (GOOG)(GOOGL) Ironwood TPU during the second half of 2025.
“On the supply chain side, AVGO plans to keep HBM in-house to prevent anything that could go wrong and ensure responsibility for the final product,” Curtis said. “HBM4 is on the roadmap but no vendor decisions have been made.”
Jefferies reiterated its Buy rating and increased its price target to $315 from $300.
Broadcom shares increased 1.7% during early trading on Monday.