HSBC upgrades Broadcom to Buy with $400 price target, expecting strong growth in ASIC business.

From Financial Modeling Prep: 2025-06-24 16:33:00

Broadcom (NASDAQ:AVGO) saw a 3% rise in shares after HSBC upgraded the company to Buy with a $400 price target. The upgrade was driven by a positive outlook for the company’s custom ASIC business, fueled by increasing AI infrastructure spending.

Following Broadcom’s Q2 2025 earnings call, estimates for ASIC revenue in 2026 and 2027 were raised significantly. HSBC believes these revisions still underestimate the company’s true potential, expecting ASIC revenue to outpace the broader AI GPU market.

HSBC highlights a trend towards larger ASIC die sizes, leading to higher prices. The firm predicts a 92% increase in blended average selling prices for ASICs in 2026 and a further 25% in 2027.

HSBC raised its ASIC revenue projections for Broadcom to $28.4 billion in 2026 and $42.8 billion in 2027, significantly above current Street estimates. The firm believes Broadcom’s current valuation does not fully capture the potential of its AI-driven ASIC growth, leading to the upgrade to Buy.

HSBC’s bullish stance on Broadcom is driven by the belief that the company’s AI-driven ASIC growth is not fully reflected in its current valuation. The upgrade to Buy and the higher price target reflect HSBC’s confidence in Broadcom’s potential for significant growth in the coming years.



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