Broadcom (AVGO) stock rebounded 2.1% to close at $332.31 on February 25, 2026. It again reignited another 0.4% in after-hours trading, reaching $333.52, following a strong outlook from Nvidia, which lifted the sentiment across the AI chip sector.
NVIDIA’s Forecast Sparks Sector Rebound
Broadcom, with its high-end networking gear and custom silicon powering the majority of the computing operations, positions itself at the crossroads. Additionally, the firm is also banking on infrastructure software as a key growth pillar. The shift is significant as investors sought firms that could fuel the next phase of data-center expansion, assessing how the deals would be struck.
The rebound came after Broadcom shares dipped to nearly 2% the previous day due to the reports of Meta Platforms securing a major deal with Advanced Micro Devices (AMD) for custom AI chips, potentially valued at up to $60 billion. This raised concerns that Broadcom could lose a key customer, as D.A. Davidson analyst Gil Luria noted that the deal would cause a major impact on AVGO. (Reuters) It was reported that Meta received a warrant providing the firm with the option to acquire as much as 10% of a new AMD division working on the project at a fixed price.
Despite this, the rebound is significant as investors took their cue from Nvidia’s upbeat forecast, which reinforced the demand for AI infrastructure. Broadcom’s own AI backlog is currently standing at $73 billion, which is nearly half of its total $162 billion backlog. It is expected to be delivered over the next 18 months.
Concerns Emerge Around Software Segment Performance
Analysts have mixed views about the current environment, pulling Broadcom’s next earnings forecast in different directions. TD Cowen trimmed its price target from $450 to $405. The firm is sticking with a buy rating, citing the potential growth of AI infrastructure despite the stock’s valuation sliding down.
While the UBS maintained its buy rating and stuck a price target of $475, it pointed to some of the new concerns around Broadcom’s software segment. Analysts have been warned about the chance of an increased VMware customer churn in 2026 and 2027, highlighting these three years as the period of long-term software contracts renewals.
Key Highlights: Margins, AI Networking Demand, and VMware Updates
February 25, 2026, marked broad gains, with the U.S. stocks closing in positive territory, lifted by chipmakers. The Philadelphia Semiconductor index (SOX) climbed 1.6%, and Nvidia drove the sector higher by beating the revenue expectations, sending the stocks up roughly 3% after hours.
However, the risks are not that far. Major deals think that AMD’s agreement with Meta will show how fast heavyweight buyers can pivot by bringing in new suppliers or balancing between their own chips and external partners. The stock could take a hit if Broadcom starts slipping away from the custom AI silicon or if the software renews souring further expectations.
Broadcom’s next earnings report is scheduled for March 4, 2026, after the market closes. Until then, investors will be closely watching the margins and seeking updates on AI networking demand, along with the VMware renewals.
