Broadcom Inc. (AVGO) is becoming a Wall Street favorite again, and the story is pretty straightforward: AI chips are hot, supply chains are tight, and the big cloud companies can't get enough of either.

The chipmaker is seeing rising demand for its products as artificial intelligence adoption picks up speed, according to analysts at TD Cowen who recently sat down with the company. Led by Joshua Buchalter, the team stuck with their Buy rating and $450 price target on the stock.

The Memory Crunch Is Real

Here's where things get interesting. Analysts are warming up to Broadcom and similar companies because hyperscalers—think the Amazons and Googles of the world—are scrambling to lock down memory supplies.

After a trip to Asia, KeyBanc analyst John Vinh reported that hyperscalers are pre-booking DRAM and NAND capacity in anticipation of 50% data center bit growth coming in 2026. That rush to secure supply is pushing contract prices sharply higher.

Vinh remains positive on AI and infrastructure-linked names including Nvidia Corp. (NVDA), Broadcom Inc. (AVGO), Marvell Technology Inc. (MRVL), and others riding this wave.

Within the custom silicon space specifically, Vinh called out Broadcom as a major winner. The company's Chip-on-Wafer-on-Substrate supply outlook for 2026 has jumped significantly as Tensor Processing Unit programs ramp up production.

There's also the OpenAI factor. While their custom Application-Specific Integrated Circuit program has been delayed, Vinh sees it as a substantial long-term opportunity that could meaningfully boost Broadcom's AI backlog when it eventually materializes.

The AI Party Continues, With Some Caveats

RBC Capital Markets also weighed in, saying the AI cycle still has legs despite ongoing investor hand-wringing about valuations and sustainability.

Analyst Srini Pajjuri believes hyperscalers will maintain elevated capital spending levels for the next 18 to 24 months. That's good news for the entire ecosystem.

GPUs remain the centerpiece of AI investment, Pajjuri noted, with Nvidia's dominance largely holding despite mounting competition from custom chips. He expects continued hyperscaler spending to keep Nvidia's demand pipeline full, though he acknowledges the valuation already bakes in some risk of a slowdown.

On Advanced Micro Devices, Inc. (AMD), Pajjuri sees the company as a credible alternative GPU supplier following its OpenAI partnership, but thinks much of the near-term upside is already reflected in the stock price.

As for Broadcom, he highlighted strong momentum in custom accelerators but flagged some concerns around customer sustainability, stretched valuations, and potential margin pressure going forward.

The takeaway? The AI infrastructure build-out is real and ongoing, but investors need to pay attention to which companies are priced for perfection versus which still have room to run.

AVGO Price Action: Broadcom shares traded up 1.81% at $334.75 during premarket trading on Thursday, according to market data.