What a $50 Billion Debt Deal Could Mean for Broadcom Stock

Global semiconductor company Broadcom (AVGO) is reportedly in talks to arrange more than $50 billion in debt financing to help OpenAI purchase custom AI chips that the two companies are developing together. Broadcom has reportedly approached private-credit firms, including Apollo Global Management (APO) and Blackstone (BX), as potential lenders. No formal decision has been made, and the deal is unlikely to be made before next year. 

The AI infrastructure building frenzy has led companies to seek financing options, which could help OpenAI cover upfront hardware costs while it waits for its compute deployments to generate revenue. This is not the first time Broadcom has engaged in financing an AI chip deal, as it mirrors the $60 billion debt-financing deal to help Anthropic and other companies access AI chips and infrastructure. 

This means Broadcom is taking a much more active role in AI chipbuilding, designing AI hardware, and even helping arrange the financing needed to deploy it. That may strengthen its commercial opportunity, but debt also comes with its own set of risks. Meanwhile, Broadcom is generating solid revenue, which keeps it in contention for a strong share of the AI chip market. 

Let's take a closer look at Broadcom now.

About Broadcom Stock

Broadcom is a global technology company headquartered in Palo Alto, California. It designs, develops, and supplies semiconductor and infrastructure software solutions for mission-critical enterprise and communications systems. The company has a market capitalization of $1.72 trillion.

Its Semiconductor Solutions segment serves networking, wireless, data center, broadband, storage, and industrial markets, including chips used in AI infrastructure and custom accelerators. Its Infrastructure Software segment provides mainframe, cybersecurity, cloud, and enterprise software, including VMware. Broadcom operates through global research, development, sales, and outsourced manufacturing networks, positioning itself across both hardware and software layers of modern digital infrastructure.

Investors have already priced in a solid AI boom and are now demanding proof that extraordinary growth can continue. As a result, Broadcom’s stock is up just 11% over the past 52 weeks. As expectations remain high, investors are not readily reacting to results. Over the past three months, Broadcom’s stock has fallen 10%. It reached a 52-week high of $495 on June 3, but is down 27% from that level.

On a forward-adjusted basis, Broadcom’s price-to-earnings (P/E) ratio of 30.89x is higher than the industry average of 22.92x.

Q3 Revenue Rose on Strong AI Chip Demand

For the third quarter of fiscal 2026 (quarter ended Aug. 2), Broadcom’s net revenue rose 86% year-over-year (YoY) to $29.59 billion, as AI semiconductor revenue of $16.7 billion grew 221% YoY. The company continues to face strong demand for custom AI accelerators and networking. This also boosted Broadcom’s bottom line. Its non-GAAP EPS increased 96% from the prior-year period to $3.32. Its free cash flow for the quarter was $13.67 billion, up 95% YoY. 

Broadcom also expects this momentum to continue in the fourth quarter of fiscal 2026. The company expects AI semiconductor revenue to accelerate to $21.7 billion, up 236% YoY. Consolidated revenue is expected to grow 93% YoY to $34.8 billion, while the non-GAAP operating margin is projected to remain unchanged at 66%.

Wall Street analysts are robustly optimistic about Broadcom’s future earnings. They expect the company’s EPS to climb by 114.3% YoY to $3.45 for the fourth fiscal quarter. For fiscal 2026, EPS is projected to surge 84.2% annually to $10.37, followed by a 68.2% growth to $17.44 in fiscal 2027. The company has also topped EPS estimates in each of the trailing four quarters.

Here’s What Analysts Think About AVGO Stock

Last month, Piper Sandler analysts initiated coverage of AVGO stock with an “Overweight” rating and a $460 price target, citing the company’s leadership position in ASIC chips that are used for AI inference. Most hyperscalers and AI labs maintain ASIC co-design relationships with Broadcom. Piper Sandler analysts expect EPS to grow at about 51% CAGR through 2030. 

Analysts at Morgan Stanley also raised the price target on Broadcom from $502 to $505, while maintaining an “Overweight” rating, citing a slight revision in its estimates for the new price target. The firm’s analysts expect Broadcom to achieve over 80% market share of its serviceable addressable markets over time. KeyBanc analysts reiterated an “Overweight” rating and a $575 price target on Broadcom following its third-quarter results. 

Wall Street analysts are strongly bullish on AVGO stock, with a consensus “Strong Buy” rating. Of the 43 analysts rating AVGO, a majority of 35 have given it a “Strong Buy,” three suggest a “Moderate Buy,” and five are playing it safe with a “Hold.” The consensus price target of $524.08 represents a 47% upside from current levels. Moreover, the Street-high price target of $715 implies a 100% upside.

On the date of publication, Anushka Dutta did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.