11 AI Stocks Analysts Are Watching Closely

5. Broadcom Inc. (NASDAQ:AVGO)

Number of Hedge Fund Holders: 183

Broadcom Inc. (NASDAQ:AVGO) is one of the 11 AI Stocks Analysts Are Watching Closely. On January 15, Wells Fargo analyst Aaron Rakers raised the price target on the stock to $430 from $410, upgrading to Overweight from Equal-weight.

With recent pullback in shares seen as an attractive re-entry point, analysts have expressed confidence in AVGO’s long-term AI driven revenue and margin durability.

“We think the recent pull-back in shares of Broadcom, coupled with increasing confidence in potentially meaningful incremental catalysts looking through 2026, gives us the opportunity to get constructive.”

The firm has increased its calendar 2026 and 2027 estimates for the company, from $97.0B / $103.6B and $130.5B / $139.0 to $108.4B / $115.3B, respectively. The revised estimates are a reflection of higher projections for Broadcom’s AI semiconductor revenue, now expected to reach $52.6 billion (up 116% year-over-year) in 2026 and $93.4 billion (up 78% year-over-year) in 2027.

Analysts noted how this reflects AI Compute revenue at $36.6B (+131% y/y) and $66.2B (+81% y/y), with AI Networking revenue at $16.1B (+87% y/y) and $27.2B (+69% y/y), respectively.

While non-AI chip business for Broadcom may be flat, its software business is strong and margins should stay high. This means concerns about falling profitability are overstated.

“We maintain a relatively flat calendar 2026 and 2027 revenue estimate for Broadcom’s aggregate non-AI semiconductor revenue. We model Broadcom’s Infrastructure Software revenue in line with the company’s guidance of low double-digit growth in FY26. Broadcom exited FY25 with a ~$73 billion Infrastructure Software backlog, up from $49 billion exiting FY24. From a margin perspective, we model Broadcom’s semiconductor GM% to decline to ~65% in our early estimates (vs. 68.2% in FY25) to reflect systems contributions; we believe concerns over a material decline (sub-60% GM%) are overdone. Our estimates reflect an expectation that Broadcom can maintain a ~65%+ EBITDA margin.”

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