Broadcom (AVGO) Upgraded to Buy as Anthropic IPO Filing Lifts AI Outlook

Broadcom just picked up the kind of upgrade investors hope for: an analyst arguing the market is pricing in the worst case. On Tuesday, D.A. Davidson's Gil Luria moved AVGO to Buy from Neutral and lifted his price target to $400 from $350.

The trigger was Anthropic's IPO paperwork. The AI lab filed an S-1 on Monday saying it plans to list on the Nasdaq under the ticker "ANT," and Luria read the filing as evidence that the AI spending cycle isn't finished yet.

His new target implies roughly 22% upside from Monday's close, as CNBC reported. Shares jumped as much as 5% Tuesday morning and were still up about 3.5% at 11:20 a.m. ET, according to the Motley Fool.

That pop still leaves the stock down nearly 5% for the year, trailing the broader market. A company worth roughly $1.6 trillion has been going sideways while its biggest customers keep spending.

Why would an IPO filing move a chipmaker? Because Broadcom isn't just a supplier here. The Motley Fool's coverage notes Broadcom is also Anthropic's lessor, under a non-cancelable five-year lease, and that Anthropic has deposited funds with Broadcom to secure compute capacity.

The financing ties run deeper. Earlier this month Anthropic disclosed it can borrow up to $42 billion from Broadcom. On Monday, Broadcom said Bank of America, Blackstone, Citi and Morgan Stanley set up a special purpose vehicle to finance $63 billion of Broadcom AI chips for Anthropic.

Other analysts piled on. Raymond James' Simon Leopold had expected Anthropic to deploy another 5 gigawatts of TPU8i capacity in Broadcom's fiscal 2027 and an extra 10 gigawatts in fiscal 2028, making it Broadcom's largest custom-chip customer next year. He said the filing supports the size and staying power of that opportunity.

"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." — Chris Caso, Analyst, Wolfe Research

Here's the thesis in plain terms. Luria says the IPO will go ahead, Anthropic will raise its capital, and OpenAI will raise more next year. That funding is what lets Broadcom hit its numbers for the next couple of years.

At 16 times 2027 earnings per share, Luria argues, the stock trades as if the odds of that happening are near zero. If both deals land, the upside is meaningful. The Motley Fool adds that Broadcom's PEG ratio is 0.43, and anything under 1 usually signals a stock that's cheap relative to its growth.

Don't mistake this for a contrarian call, though. Of the 51 analysts covering Broadcom, 48 already rate it a buy or strong buy, per LSEG data. The stock hasn't lagged for lack of fans. It's lagged because investors worry about how long the AI build-out can be funded.

That's the real risk, and Leopold flagged it. He called the potential $42 billion financing commitment a "less appreciated financial exposure," even though it may be transferred to a financial partner. A chipmaker financing its own customer is a circular loop, and loops are comfortable only while the music plays.

The IPO itself also isn't done. No pricing date has been set, and everything in Luria's case leans on Anthropic actually raising the money. A delayed or rocky listing would hit the thesis directly.

For investors, the practical read is this. Broadcom traded near $340 on Tuesday, per Finbold, so the $400 target leaves room but not a mile of it. Scaling in beats going all at once, especially with an IPO date still unknown.

Watch three things: the timing and pricing of the Anthropic listing, whether the $63 billion special purpose vehicle closes as described, and any update on the $42 billion loan structure. Clean answers on all three make the bullish case a lot harder to argue with.

Bottom line: the market is treating Broadcom's AI backlog like a maybe, and the Anthropic filing just made it look more like a plan.