Broadcom has been the main beneficiary of Alphabet's rally. Is it not too late to buy the stock?

Broadcom, a contract manufacturer of custom chips for Google's AI servers, has become one of the main beneficiaries of the growth of Alphabet shares, which hit an all-time high on November 25, Investopedia writes. Broadcom shares are up 12% over the past five trading sessions. Most analysts hold a buy recommendation on them, despite the fact that the price is already close to fair.

Broadcom shares rose sharply, following the Alphabet securities, Investopedia writes. Google's parent company's stock rose amid a series of positive developments for the cloud giant, from Warren Buffett's Berkshire Hathaway buying a stake in the company to positive user reaction to a new AI model and reports of a possible new deal to supply chips for Meta. As this implies increased purchases of AI chips for data centers, the maker of those chips - Broadcom - can also expect to see revenue growth.

Quotes of Alphabet and Broadcom are growing amid a decline in the shares of other leaders of the AI rally, such as Nvidia. This may indicate a possible revaluation of the AI segment leaders and redistribution of the highly competitive market of AI chip production, Investopedia writes.

With the recent gains, Broadcom shares have added about 70% since the beginning of the year, ranking among the best performing stocks in the S&P 500 index. Nvidia has 33% growth in 2025.

Analysts at Bernstein said on Nov. 25 that Broadcom would be the "clear winner" in the chip deal being discussed between Meta and Google. Broadcom is Google's partner in developing custom AI chips and at the same time a supplier to Meta.

"While the stock has become more expensive, this may be justified: we continue to believe market valuations are undervalued," the analysts said. Bernstein maintains an Outperform rating on the chipmaker's stock and a $400 target price, implying a 4% upside from the closing price on Nov. 26.

On November 26, Goldman Sachs analyst James Schneider raised his target price on Broadcom shares from $380 to $435, which implies a 13% increase from the previous day's closing level. He also maintained a buy recommendation on the stock. Schneider revised the estimate ahead of the chipmaker's report, which is scheduled for Dec. 11. "We expect solid growth in the AI segment in the fourth quarter and forecast first quarter growth above market expectations due to strong purchases from key customers. In addition, we forecast that management will update AI revenue guidance for fiscal 2026, showing annualized growth of more than 100 percent," the analyst wrote in a note cited by CNBC.

Schneider estimates that revenue from Broadcom's AI products will reach $45.4 billion in fiscal 2026, representing 128% year-over-year growth. In 2027, he said, it could grow to $77.3 billion - another 70% increase.

According to MarketWatch, of the 53 analysts tracking the chipmaker's securities, 47 recommend buying them and another five recommend holding. Meanwhile, the Wall Street consensus price target is $411.5, implying another 6% upside.

This article was AI-translated and verified by a human editor