Broadcom Settles Fidelity Software Dispute as Analysts Boost AI Outlook
The deal resolves access concerns tied to VMware bundling, shifting attention to Broadcom’s trajectory in custom AI hardware.
Overview
- Fidelity agreed to voluntarily dismiss its Massachusetts lawsuit after Broadcom committed on January 28 to continue supplying software and services to a Fidelity subsidiary, with Fidelity saying operations will not be disrupted.
- Wolfe Research upgraded Broadcom to Outperform on January 30 with a $400 target, citing checks that suggest the company could ship up to 7 million TPUs by 2028 and that AI revenue could double by 2027 in its bullish case.
- Counterpoint Research expects Broadcom to hold roughly 60% of AI server compute ASIC design share by 2027, reinforcing its standing as a key custom silicon partner.
- Bank of America named Broadcom a top compute pick on January 26, pointing to strong cloud capex trends and projecting robust sales and EPS growth for leading compute names through 2027.
- Broadcom guided to a roughly 100-basis-point sequential decline in Q1 gross margin due to a higher AI mix, and it expects more AI system shipments in the second half that could pressure margin percentages while lifting gross margin and operating profit dollars.