Broadcom Is a Core AI Winner, Says Wall Street Legend — Why He's Spot On

Morgan Stanley's Joseph Moore calls Broadcom a "core" AI winner with a $502 price target, even after its 18% post-earnings drop.

Hyperscalers shifting budgets from GPUs toward custom inference chips place Broadcom at the center of the next AI infrastructure wave.

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It's easy to forget about Broadcom ( NASDAQ:AVGO ) as its momentum slows to a pace such that it can't keep up with all of the "new new" AI stocks out there, from Elon Musk's Space Exploration Technologies ( NASDAQ:SPCX ) to South Korean memory chip heavyweight SK Hynix ( NASDAQ:SKHY ). With more AI IPOs with potential to command valuations well north of the $1 trillion mark, 2026 really is the year of the mega AI IPO. And size doesn't seem to be a limiting factor when it comes to growth in these early days of the AI boom.

Just because there are a lot of new and more exciting names in the mega-cap tech scene doesn't mean it's time to forget about the old firms that have been firing on all cylinders. Of course, these massive IPOs, with Anthropic on the way, are going to cause significant capital flows from elsewhere in the market.

Much of the capital could flow out of the wrong areas. Broadcom stands out as a terrific value for investors looking to play the other side of the trade, as investors rotate away from proven firms towards something that's a bit more exciting.

Now down more than 18% after suffering a quarterly result that saw AI guidance come in a bit lighter than expected, I do think there's a golden opportunity in the AI bargain bin when it comes to Broadcom, especially after extending a long-term deal with Apple ( NASDAQ:AAPL ) — a firm that's quietly rising up the ranks of AI with minimal spend.

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Add uncertainties surrounding the rise of competitors, including Taiwan's MediaTek, into the equation, and it feels like there are more exciting, less concerning names riding the AI tailwind to bet on these days.

Despite the growing list of reasons to sell or hold off on buying more, one big-name analyst over at Morgan Stanley ( NYSE:MS ) recently had encouraging things to say about the now-underperforming semiconductor stock, going as far as to call it a "core" AI winner. These are big words at a time when some Broadcom shareholders might be on the fence about whether or not it's time to take gains after the weak relative performance in 2026.

With a $502 price target, Morgan Stanley's Joseph Moore sees "continued strength" while also noting that the narrative surrounding the "eventual displacement [from MediaTek for Google's business] as premature." I couldn't agree more. While MediaTek ought to be on the radar, I still view Broadcom as having what it takes to keep moving at high speed.

Looking into the second half, it's going to be exciting to see how OpenAI's Jalapeno inference chips do as the custom silicon effort picks up traction. As more hyperscalers allocate a greater portion of their budgets towards custom silicon in a bid to cut GPUs out of the equation, one has to think that Broadcom is positioned to land on its feet as the AI boom moves ahead.

Of course, Broadcom's AI narrative might be nothing new, but it's one that's working and could overshoot expectations that were recently lowered following that post-earnings plunge earlier in the year.

Given Broadcom's history of guiding fairly conservatively, I do like the firm's chances as it looks to overdeliver after underpromising and being punished harshly for it, following a quarter that was actually quite decent.

The custom silicon boom is still on the table, and as more firms get serious about investing in more efficient inference chips, perhaps the setup couldn't be much better for Broadcom.