Broadcom (AVGO) has long been considered a backbone of the AI boom, but analysts argue its importance has been “underappreciated” compared with the spotlight on Nvidia (NVDA).
Much of Broadcom’s muscle comes from its crown-jewel product line, the Tomahawk switch.
In a recent note, Artisan Partners’ Antero Peak Strategy laid out a bullish thesis for AVGO centered on Tomahawk, Broadcom’s family of high-speed Ethernet switch chips that power cloud and AI data centers.
Comparing Broadcom’s Ethernet innovations to Nvidia’s silicon advances, Antero pointed to two major catalysts for the company’s AI business over the next few years.
One is the ramp-up of its next-generation Tomahawk 6 switch, and the other is the onboarding of several new custom ASIC customers.
“The new Tomahawk 6 chip can now support both scale-up and scale-out environments, which will be essential for large-scale training clusters coming online over the next few years,” the hedge fund wrote.
Broadcom already counts Alphabet (GOOG), Meta Platforms (META), and China’s ByteDance among its biggest hyperscale customers.
Once a hyperscaler integrates Tomahawk into its infrastructure, switching away becomes costly and complex, effectively locking in sticky, long-term revenue streams for Broadcom.
Beyond networking, Broadcom has also signaled that it has four active engagements for the development of next-generation AI accelerators, though it has not disclosed the names, according to Antero.
Despite these wins, Antero says Broadcom’s role in AI still isn’t fully recognized by the market.
AI boom lifts AVGO stock
Broadcom is now one of just 11 publicly traded companies with a market capitalization above $1 trillion. Valued at roughly $1.4 trillion, it ranks eighth globally, behind mega-cap giants like Apple (AAPL), Amazon (AMZN), Meta Platforms, and Saudi Aramco.
AVGO shares have surged 28% year-to-date and nearly 90% over the past 12 months, thanks to relentless investor enthusiasm for AI.
But Broadcom’s impressive growth isn’t just hype. In its fiscal first quarter, semiconductor revenue climbed 11% year-over-year to $8.21 billion. CEO Hock Tan reaffirmed expectations for “continued strength in AI semiconductor revenue.”
Total company revenue reached $14.92 billion for the quarter, while earnings came in at $1.60 per share, both comfortably ahead of Wall Street estimates.
Reflecting that strength, analysts at Citi reiterated their “Buy” rating on AVGO with a $315 price target, underscoring confidence in Broadcom’s growth trajectory. That implies roughly 6% upside relative to today’s price.
With its Tomahawk switches entrenched at the world’s largest hyperscalers and new AI accelerator projects in the pipeline, Broadcom’s “underappreciated” role in the AI race may not stay overlooked much longer.
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