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Today's Bonus Story
Broadcom & Meta Extend AI Pact Into 2029 as Shares Climb to $400Reported by Leo Miller. Publication Date: 4/21/2026. 
Key Points
- Broadcom is back up from its lows, expanding several key AI partnerships along the way
- Broadcom received its latest AI expansion from Meta Platforms, with the companies set to collaborate on custom chips through 2029
- As Broadcom hits $400 again, its forward P/E ratio is down substantially, a positive sign going forward
- Special Report: The Biggest IPO Ever: Claim Your Stake Today
After plunging more than 25% to below $300 per share, semiconductor giant Broadcom (NASDAQ: AVGO) has staged a sizable recovery. Now trading near $400, the stock is up more than 10% in 2026 and has rebounded over 30% from its 2026 lows. In early April, Broadcom expanded its artificial intelligence (AI) chip partnerships with Google parent Alphabet (NASDAQ: GOOGL) and Anthropic, jolting the stock. About a week later, Broadcom announced an expanded partnership with another major customer: Meta Platforms (NASDAQ: META).
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Importantly, despite these developments and the stock’s return to $400, Broadcom’s forward price-to-earnings (P/E) ratio has declined substantially as analysts raised forward earnings estimates. That lower valuation helps reduce the risk of a repeat of the late-2025 to early-2026 drawdown. Meta and Broadcom Work on 2nm AI Chips, Extend Partnership Through 2029With their latest announcement, Broadcom and Meta confirmed their long-running business relationship will continue for years. The firms will collaborate on future generations of Meta’s custom AI chips over the next three years, extending their partnership through 2029. While the long-standing nature of the relationship was not in doubt, the announcement provides greater visibility for Broadcom's near-term pipeline. Broadcom and Meta say they will roll out the world’s first two-nanometer (2nm) AI accelerator, a notable technological milestone. Lower nanometer process nodes generally indicate more advanced manufacturing and can enable better performance and efficiency, but nanometer size is only one factor in overall chip and system capability. In connection with the deal, Broadcom CEO Hock Tan will not run for re-election to Meta’s Board of Directors. Price Targets Hold Steady Amid Meta AnnouncementThe companies say their initial commitment exceeds one gigawatt (GW) and is the first phase of a multi-GW rollout. This aligns with Broadcom’s prior comments on Meta during its last earnings call. Analysts use gigawatts to measure the scale of data center deployments, and a multi-GW deal with Meta carries meaningful revenue implications: Bernstein analyst Stacy Rasgon estimates Broadcom generates roughly $20 billion in revenue per GW. Broadcom and Meta’s partnership also covers networking components in addition to custom AI processors. Networking silicon, including Ethernet switches, directs data flow and enables communication between processing chips. While Broadcom’s XPUs draw a lot of attention, networking is a substantial part of its AI business. Broadcom expects next quarter’s total AI revenue to rise 76% year over year to $14.8 billion, with about 40% of that coming from networking—roughly $5.92 billion. On the day of the announcement, Broadcom shares rose roughly 4.2%. MarketBeat has not tracked any Wall Street analysts updating their price targets since, likely because much of the news was already anticipated. Still, the confirmation that Broadcom and Meta will extend their relationship through 2029 is a positive for Broadcom’s near-term outlook. Despite the absence of widespread target upgrades, analysts remain broadly bullish on Broadcom. The MarketBeat consensus price target for AVGO sits near $435, implying just under 10% upside. Targets updated after Broadcom’s most recent earnings average about $489, suggesting more than 20% upside; these updated targets range from $450 up to $545. Financials and Outlook Catch Up: Broadcom’s Forward P/E Falls Despite Return to $400Investors will recall the last time shares traded near $400—in early December 2025, Broadcom closed at an all-time high of $411 before dropping about 29% through late March. Given that recent history, some concern is understandable now that the stock has returned to similar levels. There is, however, a key difference. In December, Broadcom’s forward P/E ratio was in the high 40s (roughly 47x–49x). Today, AVGO’s forward P/E sits around 30x. That shift reflects meaningful improvement in Broadcom’s financials and forward outlook. The stock now trades at a comparable price but with higher expected earnings, which has driven the forward P/E down by more than 30%. Put simply, Broadcom’s current price is better supported by near-term earnings expectations, making a repeat of the December-to-March decline less likely. The stock’s roughly 30x forward P/E is just above its three-year average of about 29x. |
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