Broadcom Stock Selloff Presents Buying Opportunity as AI Revenue Projections Soar
Broadcom shares plunged 18% over three sessions—their steepest drop since March 2020—after issuing weaker-than-expected margin guidance. Yet J.P. Morgan remains bullish, naming the chipmaker its top semiconductor pick for 2025 with a $475 price target.
AI revenue is projected to triple from $20 billion in fiscal 2025 to $55-60 billion by 2026, despite management warning of a 1% gross margin compression. The custom chip market, where Broadcom leads, continues growing at a blistering 40-45% annual pace.
While Q4 earnings revealed 28% YoY revenue growth and 74% AI semiconductor sales surge, investors focused on profitability concerns. The disconnect between fundamental strength and market reaction creates what analysts deem a prime entry point.