Broadcom's Secret Weapon: The Massive AI Chip Deal Set To Explode In 2027

Broadcom Inc (NASDAQ:AVGO) continues to show strong growth potential, with Mizuho maintaining a bullish stance despite concerns that the stock may already be fully valued.

Strong Demand Across Chips And Networking

Analyst Vijay Rakesh reiterated its Outperform rating and $480 price forecast on Friday after meeting with CEO Hock Tan and other executives, highlighting solid demand across Broadcom's chip and networking businesses.

The analyst said Broadcom is building a large pipeline of custom chips for major customers like Anthropic and OpenAI, including a major deal expected to begin in 2027.

He expects this pipeline to support steady growth as new products roll out over time. Rakesh also pointed to continued strength in networking, which should further support the company's expansion.

Software Growth And Cash Flow Outlook

The analyst expects Broadcom's VMware software business to grow at a steady pace of high single digits to around 10% annually, while maintaining very high profitability of about 80% margins.

He estimates this segment could help generate more than $54 billion in annual free cash flow over time, supporting Broadcom's long-term financial strength even as the stock has already risen sharply over the past year.

Technical Analysis

Broadcom is pressing the upper end of its ...

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