Wall Street sees this chip stock as the big winner from the Anthropic IPO
Broadcom is emerging as a big winner from an Anthropic initial public offering, making this a good time to add the semiconductor stock to portfolios, according to several Wall Street analysts. Anthropic said Monday in an S-1 filing it plans to list on the Nasdaq exchange under the ticker “ANT,” setting up Wall Street for another blockbuster IPO. This led D.A. Davidson to upgrade Broadcom to buy from neutral. It also raised its price target on shares to $400 from $350, suggesting nearly 22% upside from Monday’s close. “Our reading of the Anthropic [IPO filing] leads us to believe the IPO will proceed, Anthropic will raise its capital, and next year OpenAI will raise more capital in its own IPO, allowing Broadcom to meet its expectations for the next couple of years,” analyst Gil Luria said Tuesday in a note to clients. “At the current 16x multiple on 2027 [earnings per share], AVGO is trading as if the chances of that happening are near zero, which creates significant upside if those deals both materialize.” AVGO YTD mountain AVGO year to date Shares rose more than 3% in the premarket. Broadcom is a major partner in Anthropic’s infrastructure build-out. The chipmaker said Monday that Bank of America, Blackstone, Citi and Morgan Stanley have created a special purpose vehicle that will finance $63 billion in Broadcom artificial intelligence chips for Anthropic . Anthropic also revealed earlier this month that it will borrow up to $42 billion from Broadcom to build out its AI infrastructure. Anthropic is, in turn, could become one the biggest customers of the chipmaker’s design business in 2027. In a flurry of notes, Wall Street analysts pointed to that reciprocal business relationship as a major source of upside for Broadcom, particularly if Anthropic goes public. “We anticipated Anthropic deploying another 5 [gigawatts] of TPU8i capacity in [fiscal year 2027] and an incremental 10 GW in FY28, becoming Broadcom’s largest XPU [processing units] customer in FY27,” Raymond James analyst Simon Leopold said in a note. The IPO filing “provides compelling support for the magnitude and longevity of this opportunity.” He also noted, “Broadcom’s potential $42B financing commitment, which may be transferred to a financial partner, highlights a less appreciated financial exposure.” Bigger business on the XPU front is likely to translate to considerable gains for Broadcom’s stock, William Blair analyst Sebastien Naji added. “We see an attractive risk/reward equation for the stock given Broadcom’s XPU customer roadmap and likely upside to expectations.” Wolfe Research analyst Chris Caso also said Broadcom’s multi-billion-dollar financial deal with Anthropic bodes well for future growth “up and down the supply chain” — a fact that should boost several chip stocks, including Broadcom. “The financing that covers Anthropic’s [2027] AVGO purchases is now in place, which makes it highly likely that those purchases will proceed as planned,” Caso wrote. “More broadly, the fact that these purchases do appear to be financeable despite their large size makes it more certain that bullish [2027 and 2028] forecasts will be met – up and down the supply chain.” Wall Street is largely bullish on Broadcom. Of the 51 analysts covering the stock, 48 have a buy or strong buy rating on it, LSEG data shows. Shares have fallen nearly 5% year to date, however, underperforming the overall market.