MW Broadcom's stock is a 'top pick' on Wall Street ahead of its earnings report. Here's why.
By Britney Nguyen
Some analysts see upside for the custom-chip maker over the next few years, as partnerships with Google, Meta and Open AI are expected to grow
Broadcom reports fiscal fourth-quarter earnings on Thursday.
Enthusiasm for custom chips made by Broadcom has been sweeping Wall Street going into the company's earnings report on Thursday, and some analysts are keeping an upbeat outlook for its next few years.
The custom-chip maker's stock $(AVGO)$ has gained in recent weeks after Alphabet's Google $(GOOGL)$ $(GOOG)$ unveiled its latest Gemini 3 artificial-intelligence model, which was trained with and runs on its in-house tensor processing units, or TPUs. Google and Broadcom have worked together on the product for about a decade. TPUs are one type of application-specific integrated circuit, or ASIC, that Broadcom develops with its customers.
With Google expected to expand the use of its custom chips designed with Broadcom's help beyond Gemini 3 to partners including Meta Platforms (META), Apple $(AAPL)$ and Anthropic, Mizuho analyst Vijay Rakesh said Broadcom is positioned for upside going into next year.
Rakesh estimates that Broadcom's seventh-generation Ironwood TPU and upcoming eighth-generation chip for Google will drive average sales prices of about $10,000 to $15,000, "which could translate to significant revenue upside" for Broadcom if the chips gain traction with customers, he said in a note last week.
Read: How Google could follow Nvidia to become the next $5 trillion company
He also pointed to potential for Broadcom's networking business to benefit in 2026 from the TPU scale-up and the Ethernet for Scale-Up Networking initiative, which is a collaborative effort among tech companies to meet connectivity demands from the AI infrastructure build-out. Rakesh said Broadcom's ESUN participation could drive scale-up networking to make up about a quarter of its networking revenue and set the company up to compete with Nvidia's (NVDA) NVLink and the open standard UALink interconnect.
Broadcom has "multiple tailwinds" in its custom-chip and networking segments heading into 2026, Rakesh said. He named Broadcom's stock as his "top pick" for the "multiple ASIC ramps" expected next year into 2028. Rakesh also noted that Broadcom CEO Hock Tan's pay package is tied to AI revenues from fiscal 2028 to 2030, which he sees as upside.
Jefferies analyst Blayne Curtis also has Broadcom as his "top pick," saying it "looks primed for ASIC inflection."
Although Google has been a main customer of custom chips for Broadcom for years, "these numbers are set to become more meaningful moving forward," Curtis said in a note last week. Google is seeing internal compute demand growing quickly, he said, citing a report that Google's AI infrastructure lead told employees that it needs to double serving capacity every six months to keep up with demand. And there are expectations that Google could start selling its TPUs to third-party customers.
See more: Google may be Nvidia's biggest rival in chips - and now it's upping its game
Beyond TPUs, Curtis said Meta is expected to ramp up its custom AI chip called Athena in the third quarter of next year, while OpenAI's custom Titan 1 chip is "set to layer in at least" $10 billion in the first half of 2027. In October, OpenAI announced a partnership to design and deploy 10 gigawatts of custom AI chips alongside Broadcom.
While revenue from custom AI chips "will make or break the story going forward," Curtis said he expects upside for Broadcom's networking business, especially with its new Tomahawk 6 switch for AI data centers.
Broadcom is expected to report revenues of $17.5 billion for the fiscal fourth quarter and adjusted earnings of $2 per share, according to the FactSet consensus. For full fiscal 2025, analysts tracked by FactSet are expecting revenue of $63.3 billion.
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-Britney Nguyen
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December 10, 2025 11:39 ET (16:39 GMT)
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