Top 3 Chip Stocks Recommended by an Analyst for Investment in 2026
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Dec 15 2025
0mins
Should l Buy AVGO?
Source: Barron's
Investment Outlook: Jefferies suggests that stocks in the semiconductor industry remain attractive for investment despite significant gains this year.
Market Performance: The semiconductor sector has experienced a notable run, yet analysts believe there are still opportunities for buyers.
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Analyst Views on AVGO
Wall Street analysts forecast AVGO stock price to rise
30 Analyst Rating
29 Buy
1 Hold
0 Sell
Strong Buy
Current: 318.290
Low
370.00
Averages
457.75
High
525.00
Current: 318.290
Low
370.00
Averages
457.75
High
525.00
About AVGO
Broadcom Inc. is a global technology firm that designs, develops, and supplies a range of semiconductors, enterprise software and security solutions. The Company operates through two segments: semiconductor solutions and infrastructure software. Its semiconductor solutions segment includes all of its product lines and intellectual property (IP) licensing. It provides a variety of radio frequency semiconductor devices, wireless connectivity solutions, custom touch controllers, and inductive charging solutions for mobile applications. Its infrastructure software segment includes its private and hybrid cloud, application development and delivery, software-defined edge, application networking and security, mainframe, distributed and cybersecurity solutions, and its FC SAN business. It provides a portfolio of software solutions that enable customers to plan, develop, automate, manage and secure applications across mainframe, distributed, mobile and cloud platforms.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Broadcom Benefits from AI Infrastructure Build-Out
- Market Leadership: Broadcom is a leader in networking technology, with a product portfolio that includes ethernet switches and digital signal processors focused on optimizing data flow; as AI chip clusters grow, the importance of networking equipment is increasingly critical, which is expected to drive revenue growth.
- AI Revenue Surge: The company saw a 60% increase in AI networking revenue last quarter, and this growth is anticipated to accelerate with the expansion of AI clusters, particularly with the introduction of the Tomahawk 6 ethernet switch designed to handle demands of over 1 million XPU chips.
- Rising Customer Orders: Broadcom's collaboration with major clients like Alphabet is deepening, as Alphabet ramps up its AI data center spending, and Broadcom secured a $21 billion order from Anthropic, showcasing its strong capabilities in ASIC technology and market demand.
- Future Revenue Projections: Broadcom projects that by fiscal 2027, XPU revenue will exceed $100 billion, which is 1.5 times its total revenue for fiscal year 2025, indicating significant potential for growth in the AI infrastructure sector and positioning the company for explosive growth in the coming years.
See More
Top Stock Picks for the Next Three Years
- Nvidia's Growth Potential: Nvidia (NVDA) has excelled with its GPUs over the past three years, with lifetime sales of Rubin and Blackwell GPUs expected to reach $1 trillion by 2027, indicating significant growth potential in the AI sector.
- Broadcom's Market Strategy: Broadcom (AVGO) focuses on custom high-performance AI chips for hyperscaler clients, with projected sales reaching $100 billion by 2027, showcasing strong growth prospects in a specialized market.
- Nebius's Cloud Computing Outlook: Nebius (NBIS) partners with Nvidia, expecting annual recurring revenue to hit $7 billion to $9 billion by 2026, highlighting rapid expansion and strong demand in the AI cloud computing space.
- Long-term AI Industry Trends: With global data center capital expenditures projected to reach $3 trillion to $4 trillion by 2030, investors should focus on these companies' long-term growth potential, especially as technology continues to evolve.
See More
Market Update: Oil Prices Slide Amid Tech Stock Performance
- Oil Price Impact: Oil prices have dropped below $90 per barrel due to hopes for a truce between the U.S. and Iran, which could positively influence the stock market, as falling oil prices generally lead to a more favorable outlook for equities despite Iran's denial of ceasefire intentions.
- Surge in Arm Chip Demand: Arm's first in-house designed AGI CPU chip has seen incredible demand, with projections of $15 billion in revenue by 2031, prompting Raymond James to upgrade its stock rating from hold to buy, resulting in a 12% increase in share price, aligning with Nvidia's GPU performance.
- OpenAI Fundraising Milestone: OpenAI has raised an additional $10 billion from investors, bringing its total fundraising in this round to over $120 billion, with significant participation from institutions like Microsoft, indicating strong market confidence in its future growth potential.
- Merck's Strategic Acquisition: Merck is acquiring cancer biotech Terns Pharmaceuticals for $6.7 billion to bolster its oncology portfolio ahead of the 2028 patent expiration of its top-selling drug Keytruda, highlighting Merck's strategic focus on cancer treatment advancements.
See More
GF Securities Raises Broadcom Price Target to $450 Amid TPU Shipment Growth
- Price Target Increase: GF Securities raised Broadcom's price target to $450, reflecting optimistic expectations for its future performance, particularly in light of anticipated growth in TPU shipments, which are now projected to reach 4.5 million and 7.9 million units in 2026 and 2027, respectively, an increase from previous estimates.
- Shipment Expectations: Analyst Alicia Xia noted that Broadcom's TPU shipments are expected to be 4.1 million and 5.8 million units, primarily driven by external sales, which will significantly enhance the company's market share and revenue potential.
- Product Readiness: Broadcom's Ironwood and Sunfish models are ready for customer testing, while MTK's Zebrafish has not yet started, positioning Broadcom favorably in the TPU market with an expected acceleration in deployment by 2027.
- Pricing Trend: The average selling price for the Pumafish is expected to exceed $20,000 in 2027, driven by its more complex design, which will further enhance Broadcom's profitability and competitive position in the market.
See More
Arm's New Chip Expected to Generate $15 Billion in Annual Revenue by 2031
- Chip Launch: Arm unveiled its first internal AGI CPU chip in San Francisco, specifically designed for AI inference in data centers, with an expected annual revenue of $15 billion by 2031, showcasing the company's strong competitive position in the rapidly growing AI market.
- Customer Base Expansion: Major clients such as Meta, OpenAI, Cloudflare, and SAP are among the first users of the new chip, indicating strong market demand for Arm's latest product and reflecting the company's strategic positioning in the AI sector.
- Significant Revenue Projections: Arm anticipates total annual revenue reaching $25 billion by 2031, a sixfold increase from $4 billion in 2025, with CEO Rene Haas stating that this forecast will drive earnings per share to $9, significantly boosting investor confidence.
- Positive Market Reaction: Arm's stock rose approximately 13.2% in premarket trading, with analysts calling the announcement the most significant shift in the company's history, projecting $7.5 billion in incremental gross profit and $5 billion in operating profit, further solidifying its market position.
See More
Reasons Broadcom's $100B AI Revenue Projection Could Be Understated
Broadcom's Positive Earnings Report: Broadcom reported better-than-expected sales and adjusted earnings guidance for the next quarter, indicating significant improvement in its visibility through 2027, with projected AI revenue exceeding $100 billion.
AI Revenue Forecasts: Analysts suggest that Broadcom's AI revenue could reach between $180 billion to $200 billion by 2027, with discussions around the company's growth potential and the accuracy of these forecasts.
Supply Chain Confidence: Broadcom has secured supplies of essential components for its operations, which supports its optimistic outlook and suggests confidence in demand for its products over the next 18 months.
Investment Recommendations: Analysts are recommending five specific stocks for investors to buy now, indicating a belief in their strong performance ahead of broader market trends.
See More
Broadcom Benefits from AI Infrastructure Build-Out
- Market Leadership: Broadcom is a leader in networking technology, with a product portfolio that includes ethernet switches and digital signal processors focused on optimizing data flow; as AI chip clusters grow, the importance of networking equipment is increasingly critical, which is expected to drive revenue growth.
- AI Revenue Surge: The company saw a 60% increase in AI networking revenue last quarter, and this growth is anticipated to accelerate with the expansion of AI clusters, particularly with the introduction of the Tomahawk 6 ethernet switch designed to handle demands of over 1 million XPU chips.
- Rising Customer Orders: Broadcom's collaboration with major clients like Alphabet is deepening, as Alphabet ramps up its AI data center spending, and Broadcom secured a $21 billion order from Anthropic, showcasing its strong capabilities in ASIC technology and market demand.
- Future Revenue Projections: Broadcom projects that by fiscal 2027, XPU revenue will exceed $100 billion, which is 1.5 times its total revenue for fiscal year 2025, indicating significant potential for growth in the AI infrastructure sector and positioning the company for explosive growth in the coming years.
See More
Top Stock Picks for the Next Three Years
- Nvidia's Growth Potential: Nvidia (NVDA) has excelled with its GPUs over the past three years, with lifetime sales of Rubin and Blackwell GPUs expected to reach $1 trillion by 2027, indicating significant growth potential in the AI sector.
- Broadcom's Market Strategy: Broadcom (AVGO) focuses on custom high-performance AI chips for hyperscaler clients, with projected sales reaching $100 billion by 2027, showcasing strong growth prospects in a specialized market.
- Nebius's Cloud Computing Outlook: Nebius (NBIS) partners with Nvidia, expecting annual recurring revenue to hit $7 billion to $9 billion by 2026, highlighting rapid expansion and strong demand in the AI cloud computing space.
- Long-term AI Industry Trends: With global data center capital expenditures projected to reach $3 trillion to $4 trillion by 2030, investors should focus on these companies' long-term growth potential, especially as technology continues to evolve.
See More
Market Update: Oil Prices Slide Amid Tech Stock Performance
- Oil Price Impact: Oil prices have dropped below $90 per barrel due to hopes for a truce between the U.S. and Iran, which could positively influence the stock market, as falling oil prices generally lead to a more favorable outlook for equities despite Iran's denial of ceasefire intentions.
- Surge in Arm Chip Demand: Arm's first in-house designed AGI CPU chip has seen incredible demand, with projections of $15 billion in revenue by 2031, prompting Raymond James to upgrade its stock rating from hold to buy, resulting in a 12% increase in share price, aligning with Nvidia's GPU performance.
- OpenAI Fundraising Milestone: OpenAI has raised an additional $10 billion from investors, bringing its total fundraising in this round to over $120 billion, with significant participation from institutions like Microsoft, indicating strong market confidence in its future growth potential.
- Merck's Strategic Acquisition: Merck is acquiring cancer biotech Terns Pharmaceuticals for $6.7 billion to bolster its oncology portfolio ahead of the 2028 patent expiration of its top-selling drug Keytruda, highlighting Merck's strategic focus on cancer treatment advancements.
See More
GF Securities Raises Broadcom Price Target to $450 Amid TPU Shipment Growth
- Price Target Increase: GF Securities raised Broadcom's price target to $450, reflecting optimistic expectations for its future performance, particularly in light of anticipated growth in TPU shipments, which are now projected to reach 4.5 million and 7.9 million units in 2026 and 2027, respectively, an increase from previous estimates.
- Shipment Expectations: Analyst Alicia Xia noted that Broadcom's TPU shipments are expected to be 4.1 million and 5.8 million units, primarily driven by external sales, which will significantly enhance the company's market share and revenue potential.
- Product Readiness: Broadcom's Ironwood and Sunfish models are ready for customer testing, while MTK's Zebrafish has not yet started, positioning Broadcom favorably in the TPU market with an expected acceleration in deployment by 2027.
- Pricing Trend: The average selling price for the Pumafish is expected to exceed $20,000 in 2027, driven by its more complex design, which will further enhance Broadcom's profitability and competitive position in the market.
See More
Arm's New Chip Expected to Generate $15 Billion in Annual Revenue by 2031
- Chip Launch: Arm unveiled its first internal AGI CPU chip in San Francisco, specifically designed for AI inference in data centers, with an expected annual revenue of $15 billion by 2031, showcasing the company's strong competitive position in the rapidly growing AI market.
- Customer Base Expansion: Major clients such as Meta, OpenAI, Cloudflare, and SAP are among the first users of the new chip, indicating strong market demand for Arm's latest product and reflecting the company's strategic positioning in the AI sector.
- Significant Revenue Projections: Arm anticipates total annual revenue reaching $25 billion by 2031, a sixfold increase from $4 billion in 2025, with CEO Rene Haas stating that this forecast will drive earnings per share to $9, significantly boosting investor confidence.
- Positive Market Reaction: Arm's stock rose approximately 13.2% in premarket trading, with analysts calling the announcement the most significant shift in the company's history, projecting $7.5 billion in incremental gross profit and $5 billion in operating profit, further solidifying its market position.
See More
Reasons Broadcom's $100B AI Revenue Projection Could Be Understated
Broadcom's Positive Earnings Report: Broadcom reported better-than-expected sales and adjusted earnings guidance for the next quarter, indicating significant improvement in its visibility through 2027, with projected AI revenue exceeding $100 billion.
AI Revenue Forecasts: Analysts suggest that Broadcom's AI revenue could reach between $180 billion to $200 billion by 2027, with discussions around the company's growth potential and the accuracy of these forecasts.
Supply Chain Confidence: Broadcom has secured supplies of essential components for its operations, which supports its optimistic outlook and suggests confidence in demand for its products over the next 18 months.
Investment Recommendations: Analysts are recommending five specific stocks for investors to buy now, indicating a belief in their strong performance ahead of broader market trends.
See More
