Key Takeaways
- Shares of Broadcom have declined 15% in the last 30 days, now hovering around $372—representing a 25% retreat from the peak of approximately $500
- OpenAI and Broadcom introduced Jalapeño, a specialized LLM inference chip touted to deliver “substantially better” energy efficiency compared to existing cutting-edge processors
- Jefferies’ Blayne Curtis maintains a Buy stance on AVGO, describing the recent decline as a “meaningful opportunity,” while Wall Street’s consensus target sits at $516.91
- A multi-year partnership with Google extends through 2031, potentially generating over $500 billion in revenue across multiple TPU iterations
- Analyst sentiment remains overwhelmingly positive with a Strong Buy rating, backed by 24 Buy recommendations and 3 Hold ratings
Shares of Broadcom have experienced significant volatility in recent weeks. From a peak near $500, the semiconductor giant has retreated to approximately $372—marking a substantial 25% decline from its high. The past month alone has witnessed a 15% erosion in share value.
This magnitude of decline typically captures Wall Street’s attention. Currently, sentiment appears to be shifting toward optimism.
This week, Jefferies analyst Blayne Curtis issued a Buy recommendation on AVGO, characterizing the recent price weakness as presenting a “meaningful opportunity” for market participants. Curtis, who holds a 5-star analyst ranking, is far from isolated in this perspective.
His analysis coincides with a significant product unveiling that could influence Broadcom’s trajectory moving forward.
OpenAI Partners with Broadcom on Custom “Jalapeño” Chip
Recently, Broadcom collaborated with OpenAI to launch Jalapeño, a proprietary semiconductor solution. This represents OpenAI’s inaugural Intelligence Processor, purpose-built for managing large language model (LLM) inference operations.
Inference—the computational process of executing AI models to produce outputs—has grown in strategic importance as organizations like OpenAI transition from model development to large-scale deployment.
According to Broadcom, Jalapeño demonstrates “substantially better than current state-of-the-art” energy efficiency per watt, although the processor remains in validation stages. Should these performance claims prove accurate, it could represent a compelling competitive advantage for OpenAI and potentially additional AI-focused enterprises.
For Broadcom, this development carries strategic significance beyond immediate revenue. It demonstrates the company’s capability to engineer bespoke silicon solutions for leading hyperscale customers outside its established Google partnership.
Curtis highlighted that Jalapeño represents “an important step for AVGO on the road to further customer diversification beyond Google.”
The Google Partnership Remains Central
Regarding Google—Broadcom’s existing relationship with the tech giant continues to represent a critical revenue pillar. The semiconductor manufacturer maintains a long-term supply agreement with Google extending through 2031, encompassing successive generations of Google’s TPU (Tensor Processing Unit) architecture.
This arrangement incorporates minimum volume commitments, with aggregate revenue potential exceeding $500 billion through the contract’s duration.
Curtis anticipates Broadcom’s TPU 8i variant will commence production during Q3 2026. He also dismissed competitive concerns regarding MediaTek, observing that MediaTek’s alternative TPU 8t processor is projected to ship only in constrained volumes throughout the current year.
From a valuation perspective, Curtis conducted scenario modeling positioning Broadcom’s 2028 earnings per share between $30 and $40. At the current $377 price level, this translates to approximately 10x forward 2028 earnings—a multiple Curtis considers modest given Broadcom’s competitive positioning.
Broadcom’s latest quarterly revenue reached $22.2 billion, representing 48% year-over-year growth. Despite this robust performance, the stock failed to gain momentum. Trading at over 60 times current earnings keeps market expectations elevated.
Year-to-date, shares remain approximately 9% higher.
The Street’s consensus outlook on AVGO stands at Strong Buy, comprising 24 Buy ratings alongside 3 Hold ratings. The mean analyst price target of $516.91 suggests potential upside of approximately 37% from present trading levels.
