Piper Sandler Reinitiates Broadcom With Buy, Calls It 'ASIC Compute King'

In a note to clients, Piper analysts wrote that AVGO is the leader in ASIC chips, with a 75% share for AI inference, and that most hyperscalers and AI Labs have an ASIC co-design relationship with the company. They cited Alphabet's Google TPUs as the current volume shipper and noted Alphabet's expanded deal with Anthropic for next-generation TPUs. They were also encouraged by Broadcom's ramp-up of Meta Platforms' so-called MTIAs, or Meta training and inference accelerators, and OpenAI's Jalapeno chips.

Broadcom detailed its relationships with all three companies earlier this month when it released better-than-expected quarterly earnings per share and revenue and provided a strong multiyear sales forecast for its AI custom chip business. The stock fell nearly 3% on Sept. 3, a day after its earnings release.

Investors focused more on the nearer term and a disappointing fiscal 2027 guide that management blamed on supply constraints. Those concerns, coupled with questions about the longer-term impact of Alphabet's recent deal with Broadcom's custom-chip rival Marvell, are giving Jim Cramer caution.

'What's my least favorite tech? That's Broadcom, which is why we trimmed it so aggressively going into the quarter,' Cramer said during Thursday's September Monthly Meeting. 'I know the company made some bold predictions on last week's earnings call, and that's what's keeping us from selling the rest of the stock. It also kept the stock from plummeting.'

Following the quarter, Cramer's investment club reiterated its hold-equivalent 2 rating but lowered its price target to $430 per share from $480. Broadcom stock has struggled this year, with 2026 gains of less than half of the S&P 500's nearly 11% advance.

Piper analysts argue that worries about ASIC market share loss to Marvell and other rivals, such as MediaTek and Arm Holdings, are overdone. They also like Broadcom's networking business, which accounts for 30% of AI chip revenue. 'Given AVGO's outsized networking share, driven by its Tomahawk switch and Jericho chips, the firm is ideally positioned to cross-sell its networking products along with its ASIC compute sales.'

CNBC's Cramer said he is not as convinced that competitive concerns should be dismissed. He also said the increasing politicization of the AI buildout has complicated the outlook for stocks like Broadcom, whose growth is linked to data center expansion and execution. 'We know we have too much data center exposure ... especially if we get too much political blowback on the subject.' He added that the Club is working hard to minimize risk.

Jim Cramer's Charitable Trust is long AVGO, according to the CNBC report.