1 Oversold AI Stock to Buy Before It Rebounds This Spring

When fear grips the stock market, investors tend to sell first and ask questions later. While the ongoing war in Iran is cause for concern for several reasons, many high-quality stocks have gotten swept up in broad selling, especially throughout the technology sector.

Broadcom (NASDAQ: AVGO) has fallen roughly 25% from its high at the end of last year. The stock's relative strength index (RSI) has dropped to 39, levels seldom seen since last April when tariff announcements shocked the market into a panic.

In other words, Broadcom stock is arguably oversold. Here is why investors may want to consider buying before a potential spring rebound.

Image source: The Motley Fool.

Custom AI silicon is becoming quite the catalyst

Broadcom has become a leader in AI ASICs, purpose-built chips tailored to specific customers. The company's customer list includes Alphabet, Meta Platforms, OpenAI, and Anthropic. Nvidia isn't going away by any stretch, but these major AI companies don't want to depend on one source for all their AI chips.

Now, Broadcom was already an AI player due to its networking chips. That said, Broadcom's momentum in custom silicon is a tremendous growth catalyst moving forward.

The company's total AI chip revenue was a solid $20 billion in 2025. But as Broadcom ramps up multiple custom chip roadmaps, management is targeting $100 billion in AI chip revenue in 2027, a fivefold increase in just two years.

How much upside potential are investors looking at?

As the company reports earnings over the coming months and, ideally, restates its confidence in its growth trajectory, investors will refocus on the stock's increasingly compelling valuation.

According to CNN's compilation of 54 Wall Street analyst price targets, Broadcom stock has a median price target of $470. That's a roughly 51% upside from its current share price. It's difficult to see analysts backing down from their targets unless something happens to one of the company's custom silicon deals.

Right now, analysts see Broadcom growing earnings by an average of 48% annually over the next three to five years, which makes sense given the looming surge in AI chip revenue. Trading at just 28 times forward earnings estimates, the stock is a jaw-dropping bargain for the growth expected ahead.

No, I cannot guarantee the stock's success. Nobody can. Still, it's always promising when technical indicators, such as Broadcom's RSI, align with fundamental factors to signal that a stock is oversold. As Broadcom's booming AI chip business comes into sharper focus, look for the stock to rebound with a fury from its current slide.

Justin Pope has positions in Alphabet. The Motley Fool has positions in and recommends Alphabet, Meta Platforms, and Nvidia. The Motley Fool recommends Broadcom. The Motley Fool has a disclosure policy.