Citi raises Broadcom's target price to $415, partnering with OpenAI to develop AI chips expected to bring in an additional $100 billion in revenue

Citigroup released a report stating that Broadcom (AVGO.US) has reached an agreement with OpenAI, under which OpenAI will deploy 10 gigawatts of Broadcom AI chips. Citigroup estimates that this agreement could bring approximately $100 billion in additional revenue to Broadcom over the next few years and about $8 in earnings per share. Accordingly, Citigroup has raised its financial forecast for Broadcom and increased the target stock price from $350 to $415, reiterating its "Buy" rating.

OpenAI has announced a total of 26 gigawatts of computing capacity to date. Citigroup AI analyst Heath Terry expects the cost per gigawatt to be around $50 billion, which means that cumulative capital expenditures will reach $1.3 trillion by 2030; it is expected that OpenAI's revenue will grow from approximately $12.5 billion in 2025 to $163 billion in 2030.

Based on this, Citigroup has revised its revenue and earnings per share (including equity incentives) forecasts for Broadcom for the fiscal year 2026, from $88.5 billion and $7.89 to $93.5 billion and $8.35; at the same time, it has revised its revenue and earnings per share (including equity incentives) forecasts for the fiscal year 2027, from $93 billion and $8.47 to $130 billion and $11.65