Broadcom's AI Pivot Could Unlock $400 Breakout — But The Street's Still Catching Up

Broadcom Inc (NASDAQ:AVGO) has long been seen as a steady cash generator with a reliable dividend. But the buzz around its OpenAI tie-up signals something bigger.A potential pivot into high-margin AI infrastructure that could expand its moat and deliver growth investors haven't fully priced in. The stock trades around $350 and recent Wall Street analyst ratings indicate a price target of $400 in sight. Track AVGO stock here. Read Also: Broadcom To Rally More Than 12%? Here Are 10 Top Analyst Forecasts For TuesdayFrom Commodity Chips to AI InfrastructureHistorically, Broadcom's bread-and-butter has been networking, storage and connectivity chips — stable, profitable, but largely predictable. The AI boom changes the equation. Partnering with AI juggernauts such as OpenAI opens the door to software-enabled, high-margin solutions that integrate hardware with AI-optimized firmware and custom ASICs.That's a step beyond commodity chips, creating a stickier, defensible position in next-gen data center workloads.AI Could Drive Multi-Year TailwindsThe demand for AI compute isn't just a one-off spike. As generative AI models scale across hyperscale cloud platforms, Broadcom components — particularly in networking and storage — are likely to see incremental orders, higher ASPs and recurring revenue potential.This isn't widely reflected in consensus forecasts yet, giving investors a window to get ahead of what could become a multi-year secular growth story.Margins, Moat and Market PerceptionThe combination of proprietary hardware, software integration and entrenched enterprise relationships could significantly widen Broadcom's competitive moat. High-margin AI solutions would enhance free cash flow, potentially funding more buybacks, dividends, or strategic M&A.From an investor perspective, the AI tie-up isn't just news; it's a signal that Broadcom's growth runway could be larger and stickier than Wall Street currently appreciates. Once the market prices in the moat expansion, the stock could potentially break above $400.For those betting on AI beyond the headline-grabbing GPU stocks, Broadcom presents a compelling play: a mature semiconductor giant quietly moving up the stack into high-margin AI offerings, reinforcing its moat and potentially unlocking growth that hasn't yet been fully priced in.Broadcom may be the overlooked beneficiary of the AI infrastructure boom. Broadcom CEO Sees AI Adding $10 Trillion A Year To Global GDP: ‘We Feel Very Good About It…’ Photo: Piotr Swat via Shutterstock