Broadcom (AVGO) is a semiconductor giant with a large product portfolio that includes the wired infrastructure, wireless communications, enterprise storage, and industrial end markets.
The company positioned itself as a major player in enterprise infrastructure software following its acquisition of VMware in 2023.
The stock has gained 22.64% over the past month, according to Yahoo Finance at the time of writing, Saturday morning, May 9. Meanwhile, the SPDR S&P 500 index (SPY) is up 9.11% over the same period.
Broadcom’s conference kicked off with the company’s expansion of its partnership with Google and Anthropic on April 6.
Another important step was Broadcom’s extension of its relationship with Meta (META). Broadcom will deliver technology that supports Meta Training and Inference Accelerator (MTIA) chips, with plans to expand in 2029.
Intel’s gains boosted confidence in the semiconductor sector.
Broadcom’s recent announcement also sent the stock higher.
Broadcom unveils VMware Cloud Foundation 9.1
On May 05, Broadcom introduced VMware Cloud Foundation (VCF) 9.1, an infrastructure platform for generating AI workloads.
According to the company, VCF 9.1 enables enterprises to deploy AI and agency applications at a much lower cost, with improved security and freedom to choose GPU and CPU hardware.
Broadcom says the benefits of VMware Cloud Foundation 9.1 include:
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Up to 40% reduction in server costs for clusters running a mix of AI and non-AI workloads.
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Up to 39% lower cost of proprietary storage with improved compression and deduplication in AI data pipelines.
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Up to 46% reduction in Kubernetes operational costs for running AI workloads at scale.
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4x faster cluster development and 2x increased fleet capacity to quickly scale AI infrastructure.
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All figures are based on Broadcom’s internal measurements or test results and are subject to change.
Not surprisingly, the announcement sent the stock soaring. We can get a clearer picture by looking at Broadcom’s most recent Form 10-Q. It shows that the revenue can be divided into two categories: semiconductor solutions and infrastructure software.
Of the $19.3 billion in revenue, $12.5 billion came from semiconductor solutions and $6.8 billion came from infrastructure software. However, if we look closely, we will see that the cost of profits, research and development, and other costs are very high in the semiconductor sector.
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This is best illustrated by operating income, which was $5.3 billion for infrastructure software and $7.5 billion for semiconductor solutions. Or to put it bluntly, Broadcom has strengthened its most profitable revenue segment with recent releases.
In a research paper that I shared with me, Goldman Sachs analyst James Schneider and his team offered their perspective on what they call the Agentic Economy. With Broadcom playing a major role in the AI space, they also revised their outlook on Broadcom stock.
Goldman Sachs says that AI agents can promote the use of tokens around the world
The team believes that Agentic AI can revolutionize the use of tokens. They estimate that consumer AI agents could increase the use of consumer tokens worldwide 12 times by 2030.
They estimate nearly 23 billion AI queries per day by 2030, up from about 5 million by 2025. They see that up to 30% of these questions will be directed to agents across search, shopping, travel, email, and other personal productivity activities.
Analysts estimate that business AI agents will increase the use of business tokens globally 24 times by 2030 and 55 times by 2040. Schneider wrote: “Business adoption of agent AI is still early: while surveys suggest 70–90% of businesses are trying, less than a quarter.”
Related: Goldman Sachs resets Nvidia forecast ahead of earnings
The team said it sees a clear positive impact on semiconductor companies from continued capital spending by hyperscaler and LLM providers. Analysts believe that falling token costs will make token use cases economically viable, thereby expanding the configurable computing market.
The team believes that many hyperscalers and LLM model providers will turn to Broadcom to deliver cost-optimized chip solutions that fit their specific mission.
Schneider reiterated a buy rating on Broadcom stock and a price target of $480, based on a 30 multiple of his average EPS estimate of $16.
Analysts noted the key risks for Broadcom:
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The decline in the use of AI infrastructure,
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Share the loss in a custom computer franchise,
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Continuous inventory grinding for non-AI.
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Increased competition for VMware.
Related: Goldman Sachs sets jaw-dropping AMD stock price target after earnings
This story was originally published by TheStreet on May 10, 2026, where it appeared first in the investing category. Add TheStreet as a favorite source by clicking here.
