Broadcom Stock Rebounds After JPMorgan Sees 54% Upside
Broadcom stock rebounded after J.P. Morgan reiterated Overweight and a $580 target, citing AI chips and multiyear deals that spurred rotation into semis.
KEY TAKEAWAYS
- J.P. Morgan reiterated Overweight and kept a $580 12-month price target implying 54% upside.
- Firm argued Broadcom AI custom silicon and networking plus multiyear contracts underpin revenue visibility.
- CFO said mix-driven AI growth would press consolidated gross margin toward roughly 74%.
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Broadcom Inc. (AVGO) stock rebounded on June 17, 2026, after J.P. Morgan reiterated an Overweight rating and said it would be aggressive buyers at current levels, arguing the market underestimates the company’s AI custom-silicon and networking opportunity.
JPMorgan Reiterates Overweight Rating as Shares Recover
J.P. Morgan maintained a 12-month price target of $580 per share, signaling confidence in Broadcom’s long-term prospects despite recent weakness. The note arrived as Broadcom began recovering from a multi-day June pullback, during which shares fell from about $500 to roughly $387. This decline left the stock well below recent highs before the research note coincided with a rotation back into semiconductor and mega-cap technology stocks.
Street positioning on valuation remains mixed. Broadcom trades at a premium to its historical multiples, while analyst targets vary—some recently lowered to $485 and others raised toward $530—resulting in consensus forecasts clustered in the low $500s and an industry average near $490.
Earnings Guidance and Margin Dynamics
Broadcom’s latest quarter combined very strong revenue growth with year-over-year gross-margin contraction, driven by semiconductor sales expanding faster than infrastructure software. One report cited about 84% revenue growth for the period.
On the earnings call, Broadcom’s CFO said that as AI revenue becomes a larger share of sales next quarter, consolidated gross margin is expected to decline to roughly 74%. Management described this as a product-mix effect rather than a structural margin reset. The company also left its 2027 revenue target unchanged, a factor contributing to the stock’s post-earnings weakness in June.
AI Contracts and Longer-Term Outlook
J.P. Morgan’s bullish case centers on Broadcom’s AI upside, highlighting custom silicon and networking backed by multi-year customer commitments that provide revenue visibility investors have undervalued. The firm pointed to a March five-year agreement covering multiple generations of a major cloud customer’s tensor-processing units (TPUs), which it said offers revenue visibility through 2031. Broadcom remains on schedule to begin mass production of the next TPU generation in 2028.
J.P. Morgan noted that the customer’s in-house chip development lags Broadcom by about 18 months, limiting near-term substitution risk. The bank projects Broadcom’s AI revenue could increase roughly 2 to 2.5 times in 2027 and then double again in 2028, a trajectory underpinning its maintained price target and bullish stance.
