10 AI Stocks Shaping Wall Street’s Next Big Rally

6. Broadcom Inc. (NASDAQ:AVGO)

Number of Hedge Fund Holders: 156

Broadcom Inc. (NASDAQ:AVGO) is one of the 10 AI Stocks Shaping Wall Street’s Next Big Rally. On October 6,  Mizuho analyst Vijay Rakesh reiterated an Outperform rating on the stock with a $410.00 price target. The firm believes that the stock remains well positioned.

“AVGO To Continue Leading AI Custom Silicon with an Expanding Pipeline Driving EPS Upside, and Limited GM Dilution Impact.”

The firm shed light on some key investor concerns that it discussed with the management, one of which was Broadcom’s $10 billion deal with its fourth AI customer. The fourth customer is believed to be OpenAI.

The firm noted that the anticipated $10 billion in revenue is tied to AI Racks, with non-ASIC and networking costs passed through without “margin stacking.”

The firm’s analysis further reveals a limited earnings impact from potential gross margin dilution. It estimates 166 basis points in fiscal 2026, 224 basis points in fiscal 2027, and 286 basis points in fiscal 2028, resulting in a minimal EPS impact of only 3-4%.

Mizuho also noted that OpenAI’s Titan ramp is likely to accelerate in fiscal years 2027 and 2028 because the majority of the XPU team comes from TPU (Tensor Processing Unit) backgrounds. Moreover, there is leverage coming from outsourcing racks to contract manufacturers and original design manufacturers.

The firm considers Broadcom to be the “King of AI Custom Silicon” due to accelerating ASIC revenues and broadening engagement. It encourages investors to buy the stock on its recent pullback.

Broadcom is a technology company uniquely positioned in the AI revolution owing to its custom chip offerings and networking assets.