Shares of Broadcom climbed on Thursday after the semiconductor company expanded its debt repurchase program and received renewed support from Wall Street analysts who remain optimistic about its long-term artificial intelligence growth prospects.
AVGO stock rose 3.5% in trading after Broadcom increased the size of its cash tender offers to $3 billion from $2.5 billion.
Investor sentiment was also boosted by JPMorgan’s positive outlook on the company’s AI business and its role in Google’s next-generation chip programs.
Broadcom expands debt buyback program
Broadcom said it accepted approximately $2.9 billion of the roughly $5.5 billion in notes tendered by investors, reducing part of its outstanding debt.
The company had initially launched cash tender offers to repurchase up to $2.5 billion of senior notes across six bond series carrying maturities between 2030 and 2038.
The notes include issues with coupon rates of 4.926%, 4.900%, 5.050%, 5.200%, and 5.150%.
Broadcom said the six bond series collectively represented $9.4 billion of principal outstanding.
To accommodate stronger-than-expected participation, the company increased the purchase cap to $3 billion.
The expanded limit enabled Broadcom to accept all validly tendered 4.926% Senior Notes due 2037 and 4.900% Senior Notes due 2038, including notes submitted through guaranteed delivery procedures.
The company said its initial settlement is scheduled for June 18, while guaranteed-delivery settlement is expected on June 23.
Barclays Capital and Citigroup are serving as dealer managers for the tender offers, while D.F. King is acting as the tender and information agent.
By repurchasing more of its outstanding bonds, Broadcom is reducing its debt burden and potentially lowering future interest expenses.
JPMorgan remains bullish on AI growth outlook
The debt repurchase announcement came alongside renewed optimism from JPMorgan regarding Broadcom’s position in artificial intelligence infrastructure.
Analyst Harlan Sur said the company’s AI growth outlook remains intact and pushed back against speculation that Alphabet’s next-generation Tensor Processing Unit v9 program has been delayed or canceled.
According to JPMorgan’s research, the TPU v9 program remains on track for volume production in calendar 2028.
The firm also said Broadcom maintains a lead of more than 18 months over Google’s internal chip development team.
JPMorgan noted that Broadcom’s five-year agreement with Google secures its participation across four TPU generations and supports rising annual TPU revenue through 2031.
The firm expects Broadcom’s AI revenue to increase between two and two-and-a-half times in 2027 and then double again in 2028.
Analysts at JPMorgan said investors should be “aggressive buyers at current levels.”
The firm added that the market continues to underestimate Broadcom’s “significant dominance” in advanced packaging design, the cadence of new designs, its intellectual property portfolio, and its track record of execution.
Stock remains in constructive long-term trend
Broadcom remains in a constructive long-term uptrend despite recent consolidation.
The stock closed at $407.81, trading about 10.7% above its 100-day simple moving average of $368.50 and 13.3% above its 200-day simple moving average of $359.94.
However, the shares are trading slightly below the 50-day simple moving average of $411.60, suggesting that the stock is still consolidating after its recent rally.
The 14-day relative strength index (RSI) stands at 50.41, a neutral reading that indicates buying and selling pressures are relatively balanced and that Broadcom is consolidating rather than exhibiting overbought or oversold conditions.
With debt reduction efforts underway and Wall Street maintaining confidence in its AI business, Broadcom continues to attract investor attention as one of the key semiconductor beneficiaries of the ongoing buildout of artificial intelligence infrastructure.
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