Broadcom Earns ‘Top Pick’ Status From Wall Street’s Biggest Banks

Key Points

• Broadcom delivered a 51% total return in 2025, outperforming both the S&P 500 and the broader semiconductor sector.
• Top analysts from Mizuho, Goldman Sachs, and Bank of America expect Broadcom to surpass a $2 trillion market cap in 2026.
• Broadcom’s high gross margins signal strong pricing power and a durable competitive edge, reinforcing long-term investor confidence.

Despite ending the year in disappointing fashion, semiconductor behemoth Broadcom NASDAQ: AVGO soared in 2025. Overall, shares delivered a total return of 51% for the year.

Broadcom not only crushed the S&P 500’s 18% return, but also outperformed the semiconductor industry. Investors often use the iShares Semiconductor ETF NASDAQ: SOXX to gauge the overall performance of large-cap U.S.-listed chip stocks. Broadcom handily beat the fund’s 41% total return in 2025.

Wall Street analysts see another strong year ahead for Broadcom. So much so that three of the world’s largest banks named Broadcom as one of their top chip stocks for 2026. All three see Broadcom shares hitting a new all-time high and eclipsing a $2 trillion market capitalization. All data is as of the Jan. 12 close unless otherwise indicated.

Mizuho and Goldman See AVGO Above $2 Trillion

Analyst Vijay Rakesh at Japanese bank Mizuho recently put Broadcom, as well as NVIDIA NASDAQ: NVDA, on his list of top chip stocks for 2026. Rakesh sees both firms benefiting from rising capital expenditures at hyperscalers. Rakesh forecasts this spending to rise by 32% to $540 billion in 2026. He also notes that these firms are greatly improving the performance their platforms deliver per unit of energy. This is key to keeping Broadcom and NVIDIA entrenched with their customers as artificial intelligence (AI) increases electricity demand. Mizuho’s $480 price target on Broadcom implies 37% upside in shares.

While not semiconductor-specific, Goldman Sachs added Broadcom to its “U.S. Conviction List." The stocks on this list represent Goldman’s “most differentiated fundamental Buy ideas” across its United States stock coverage. This is a particularly strong endorsement of Broadcom, as the list focuses on Goldman’s entire U.S. stock coverage, not just semiconductors. Goldman’s $450 price target on Broadcom suggests that shares could rise 28%.

Broadcom would need to hit a new high of around $422 to reach a $2 trillion market capitalization. This calculation uses Broadcom’s current outstanding share count of approximately 4.74 billion. Based on these assumptions, both analysts predict Broadcom will exceed that figure. Note that company share counts shift over time, making these figures estimates, not definitive.

BofA Emphasizes Gross Margin Strength in Broadcom Rating

The most bullish analyst of this group is Vivek Arya at Bank of America. Along with five other names, Arya made Broadcom one of his top chip stock picks for 2026. Arya currently has a $500 price target on Broadcom. This figure implies upside potential of 42%, a gain that would result in a $2.3 trillion market cap, using prior assumptions.

Arya provides one particularly important piece of insight when it comes to investing in semiconductor stocks.

Arya said, “I often say that investing in semis is very simple… just take all your companies, sort them by gross margins, and buy the top five, and you're not going to be that wrong."

While this is an oversimplification, Arya’s take makes a lot of sense, particularly when it comes to fabless chip companies. These are firms, like Broadcom and NVIDIA, that design semiconductors but outsource their manufacturing. High gross margins are strong indicators that a company has key competitive advantages. Over the last 12 months (LTM), Broadcom’s gross margin was 79%.

If it sold a chip for $100, it paid $21 to its manufacturer, keeping $79. Broadcom’s ability to sell a chip for nearly five times what it costs them shows that it has an edge over the competition. Note that this too is an oversimplification. Broadcom also has an extremely high gross margin software business that lifts the metric company-wide.

If other firms could deliver a similar quality chip at scale, Broadcom would have to lower prices as competitors undercut it. However, the fact that Broadcom’s gross margin is so high suggests that this is not the case.

Instead, Broadcom’s customers must buy from it to receive the product they want, with these buyers having limited ability to negotiate on price. This pricing power keeps Broadcom’s gross margin high and provides clear evidence of its competitive advantage. As investing in firms with competitive advantages is often a recipe for success, Arya’s take is fair.

Arya’s Price Target Provides Counterweight to Investor Concerns

Overall, these three banks are showing considerable bullishness on Broadcom in 2026. Arya’s analysis is particularly noteworthy. Broadcom’s Dec. 11, 2025, earnings report caused a steep sell-off, as investors questioned the trajectory of the company’s gross margin. Arya raised his price target to $500 just one day later, a swift sign of pushback against these fears.