Broadcom (AVGO) Stock Decline Creates Strategic Entry Point, Says Jefferies

Key Takeaways

• AVGO shares have declined 15% in the last month, currently trading near $372—a 25% decrease from the recent peak of approximately $500
• OpenAI and Broadcom announced “Jalapeño,” a custom LLM inference chip claiming significantly improved power efficiency compared to existing solutions
• Five-star Jefferies analyst Blayne Curtis maintains a Buy rating, describing the recent decline as a “meaningful opportunity” for investors
• The company’s Google partnership extends through 2031, with projected revenue potential surpassing $500 billion across upcoming TPU iterations
• Analyst consensus remains Strong Buy with 24 Buy and 3 Hold ratings, targeting an average price of $516.91

Shares of Broadcom have experienced significant volatility in recent weeks. Following a climb to nearly $500, the semiconductor giant has retreated substantially to approximately $372—representing a quarter of its value lost from peak levels. The past 30 days have witnessed a 15% contraction.

Broadcom Inc., AVGO

Such dramatic price movements typically spark renewed analyst attention. Currently, sentiment appears to be shifting toward optimism.

This week, Jefferies analyst Blayne Curtis reiterated his Buy recommendation on AVGO, characterizing the recent downturn as generating a “meaningful opportunity” for market participants. Curtis, who holds a 5-star ranking, reflects a growing perspective among Wall Street professionals.

His commentary coincides with a significant product unveiling that may influence Broadcom’s trajectory going forward.

OpenAI Partnership Introduces “Jalapeño” Processor

Recently, Broadcom and OpenAI collaborated to introduce Jalapeño, a purpose-built custom processor. This marks OpenAI’s inaugural Intelligence Processor, specifically engineered for large language model inference operations.

Inference—the computational process enabling AI systems to produce outputs—has gained critical importance as organizations like OpenAI transition from model development to large-scale commercial deployment.

According to Broadcom, Jalapeño delivers per-watt efficiency that “substantially” exceeds existing leading-edge solutions, though the processor remains in validation phases. Should these performance claims materialize, the chip could become highly attractive for OpenAI and potentially additional artificial intelligence enterprises.

For Broadcom, this development carries strategic significance beyond immediate revenue implications. It demonstrates the company’s capability to engineer specialized semiconductors for prominent hyperscale clients beyond its established Google partnership.

Curtis emphasized that Jalapeño represents “an important step for AVGO on the road to further customer diversification beyond Google.”

Google Partnership Remains Central

Regarding Google—Broadcom’s collaboration with the tech giant continues to represent a foundational element of its business model. The semiconductor manufacturer maintains a long-term contract with Google extending through 2031, encompassing successive generations of Google’s TPU architecture.

This arrangement incorporates guaranteed minimum revenue commitments, with aggregate potential exceeding $500 billion through the contract’s duration.

Curtis anticipates Broadcom’s TPU 8i will commence production in the third quarter of 2026. He also dismissed competitive concerns regarding MediaTek, observing that MediaTek’s alternative TPU 8t is projected to ship in constrained quantities this year.

From a valuation perspective, Curtis conducted scenario modeling positioning Broadcom’s 2028 earnings per share between $30 and $40. At the current $377 price point, this translates to approximately 10x forward 2028 earnings—which he regards as modest for an enterprise of Broadcom’s caliber.

Broadcom’s latest quarterly revenue reached $22.2 billion, marking a 48% year-over-year expansion. Despite this robust performance, the stock failed to generate sustained momentum. Current trading reflects a valuation exceeding 60 times earnings, maintaining elevated expectations.

Year-to-date, shares remain up approximately 9%.

The Street maintains a Strong Buy consensus rating on AVGO, supported by 24 Buy recommendations and 3 Hold ratings. The consensus price target across analysts stands at $516.91, suggesting approximately 37% upside potential from present trading levels.

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