Broadcom Inc. (AVGO.US) receives strong recommendation from Citigroup: Price target raised to $415 after collaboration with OpenAI.

Chip manufacturer Broadcom Inc. (AVGO.US) and OpenAI, supported by Microsoft Corporation, announced a collaboration on the "10 Gigawatt Custom AI Accelerator" on Monday. Citigroup immediately raised the target price for the stock from $350 to $415 and maintained a "buy" rating. The analyst team led by Christopher Danely pointed out that although Broadcom Inc. did not provide an official forecast, they estimate that this deal is expected to bring the company revenue of about $100 billion over the next few years, contributing $8 in earnings per share. The initial custom chips are expected to start shipping at the end of 2026, with deliveries continuing until 2029. Citigroup mentioned that OpenAI has already announced a total of 26 gigawatts of AI infrastructure planning; AI analyst Heath Terry estimated that the construction cost per gigawatt is about $50 billion, meaning cumulative capital expenditures could reach $1.3 trillion by 2030. Terry predicts that OpenAI's revenue will increase from about $12.5 billion in 2025 to $163 billion in 2030. Danely and his team also believe that the "100 billion customer" disclosed in Broadcom Inc.'s third-quarter earnings report is likely xAI. The model shows that Broadcom Inc.'s AI business revenue is expected to increase from about $22 billion in 2025 (33% of total sales) to $85 billion in 2027 (65% of total sales), more than quadrupling.