Analyst sets Street-high AVGO stock price target

The upgrade comes amid surging demand for application-specific integrated circuits (ASICs), a fast-growing segment within the semiconductor industry, increasingly fueled by artificial intelligence (AI) workloads.

Why HSBC is bullish on AVGO

HSBC‘s bullish outlook is supported by sharply revised revenue estimates for Broadcom’s ASIC business in fiscal years 2026 and 2027. The bank now projects revenues of $28.4 billion and $42.8 billion for those years, respectively, up 58% and 96% from previous forecasts.

“We believe that hyperscaler capex [capital expenditures] will drive ASIC growth as almost all big hyperscalers look to invest in their custom silicon program,” Lee said.

According to Lee, the share of capital expenditure allocated to ASICs is expected to rise from just 2% in FY23 to 14% by FY27, highlighting a broader industry shift toward AI-accelerated infrastructure.

The analyst also emphasized Broadcoms strong pricing power, forecasting average selling price (ASP) growth of 92% year-over-year in FY26, followed by an additional 25% increase in FY27—driven by demand for larger, more complex chip designs.

Additionally, HSBC pointed out that Broadcom‘s internal projections for FY26 and FY27 ASIC revenue are 42% and 69% above the current Wall Street consensus, reinforcing the bank’s conviction that the market is underestimating the stocks potential.