Wells Fargo Raises Broadcom Target to $430, Citing AI Surge and Software Strength
In a significant vote of confidence for the semiconductor giant, Wells Fargo analysts have lifted their rating on Broadcom Inc. (NASDAQ:AVGO) from Equal-weight to Overweight, simultaneously raising their price target to $430 from $410. The move, announced January 15, follows a recent pullback in the stock and is predicated on heightened conviction in the company's dual-engine growth strategy, combining explosive AI semiconductor demand with steady infrastructure software expansion.
The bank's revised model presents a bullish outlook for Broadcom's AI segment. Analysts now project the company's AI semiconductor revenue could soar to $52.6 billion in 2026, marking a staggering 116% year-over-year increase. This growth is expected to continue, reaching approximately $93.4 billion in 2027. "The AI story here is transitioning from narrative to tangible, high-margin revenue at an accelerating pace," the note from Wells Fargo suggested.
Beyond the AI frenzy, Wells Fargo reiterated a stable outlook for Broadcom's core non-AI semiconductor business. Furthermore, the firm highlighted the strength of the Infrastructure Software division, which includes products from the VMware acquisition. It forecasts modest double-digit growth for this segment in fiscal 2026, underpinned by what it describes as an "exceptional" pipeline valued at around $73 billion at the close of FY2025.
Broadcom, a global leader in designing and supplying semiconductor and infrastructure software solutions, has increasingly been highlighted by institutional investors as a core holding to capture growth in both enterprise technology and artificial intelligence.
Market Voices: Analysts and Investors Weigh In
Michael Chen, Portfolio Manager at Horizon Capital: "Wells Fargo's update validates the thesis that Broadcom is more than just a cyclical chip stock. The software pipeline provides visibility and durability to earnings, making the current valuation look attractive for a long-term position."
Sarah Gibson, Independent Tech Analyst: "While the AI numbers are eye-popping, the market is pricing in perfection. Execution risk on integrating massive acquisitions like VMware while simultaneously ramping cutting-edge AI silicon is non-trivial. I'd be cautious at these levels."
David R. Miller, Editor at 'The Street Skeptic' Blog: "This is classic sell-side cheerleading after a dip. They downgrade near highs, watch it fall, then upgrade and jack up targets to create a 'catalyst.' These $90+ billion AI revenue projections for 2027 are fantasy-land spreadsheet modeling. What happens when the AI spending bubble shows its first crack?"
Priya Desai, Senior Research Analyst at Clearwater Advisors: "The upgrade isn't just about AI. It's about the synergy between their hardware and software stacks creating a formidable ecosystem. The $73B software pipeline is the unsung hero here, offering a floor under the stock's volatility."