UBS has reiterated its "Buy" rating on Broadcom (AVGO.US) ahead of the company's upcoming quarterly earnings announcement on September 4th, raising its price target from $290 to $345. The investment bank cited improving unit shipment trends for Google's latest TPUv6p tensor processing unit as a key factor that could lead to upward revisions in the company's Q4 guidance.
Broadcom is scheduled to report its latest quarterly results on September 4th. Market consensus estimates call for earnings per share of $1.66 and revenue of $15.82 billion for the quarter.
In a research note to clients, UBS analysts stated: "We expect Broadcom to deliver results in line with expectations and potentially exceed market consensus for fourth-quarter revenue of approximately $17 billion ending in October, primarily benefiting from improved unit trends for TPUv6p, while non-AI revenue is expected to show only modest growth due to continued headwinds from Apple product content."
The analysts further noted: "We anticipate TPUv6p will rapidly scale in the second half of 2025 and continue into 2026. Our research indicates that wafer demand for chip-on-wafer-on-substrate (CoWoS) packaging has increased 51% year-over-year. Therefore, we believe AI-related revenue growth could reach approximately 60% year-over-year in fiscal 2025, with average selling prices trending upward as TPUv6p increases its share in the product mix."
Additionally, UBS expects Broadcom to reaffirm its serviceable addressable market (SAM) projections of $60 billion to $90 billion for custom chips. The firm also anticipates that AI-related networking business will continue to strengthen in fiscal 2026 as Ethernet architecture deployment accelerates.
