Broadcom (AVGO) stock tumbled 12.6% intraday on June 4, after the company delivered its Q2 FY2026 results on June 3. While there were no explicit signs of a slowdown, investors wanted more from the company regarding its AI revenue forecast.
Highly renowned investor Cathie Wood, known for her focus on high-tech companies, bought 22,000 shares of Broadcom worth $5.90 million. Wood’s Ark Invest investment machine is capitalizing on the dip, after the stock shot up to a high earlier this month, after the company showcased its Edge AI portfolio designed to enhance the smart-home experience.
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We take a closer look at Broadcom at this juncture…
About Broadcom Stock
Broadcom is a global technology firm headquartered in Palo Alto, California, with a market value of $1.857 trillion. The company designs and provides semiconductor and infrastructure software solutions for data centers, networking, broadband, wireless, storage, and industrial markets.
Its semiconductor unit creates custom AI accelerators and networking chips that run AI clusters, while its software division centers on VMware's enterprise cloud and virtualization platforms.
Broadcom’s stock is up over the past year due to explosive AI demand and major hyperscaler partnerships. Moreover, the VMware acquisition expanded revenue streams into infrastructure software, and CEO Hock Tan's commitment to remain until 2030 strengthened investor confidence. Over the past 52 weeks, the stock has gained 52.11%, while it has been up 7.51% year-to-date (YTD).
However, concerns about Broadcom’s margins have weighed on its stock, as it has warned that gross margins will decline because lower-margin AI chips now account for a larger share of revenue than its software business. Over the past month, shares have been down 13.47%, and over the past five days, they have been down 22.35%. It reached a 52-week high of $495 on June 3 but is down 24.83% from that level.
www.barchart.com On a forward-adjusted basis, Broadcom’s price-to-earnings (non-GAAP) ratio of 33.75 times is higher than the industry average of 25.09 times.
Broadcom Beats Q2 Earnings Expectations as AI Revenue Surges
For the second quarter of fiscal 2026 (quarter ended May 3), Broadcom’s net revenue increased 48% year-over-year (YOY) to $22.19 billion, which is higher than the $22.04 billion that Wall Street analysts had expected.
As demand for AI accelerators and AI networking continues to climb, the company’s Q2 semiconductor revenue from AI was $10.80 billion, up 143% YOY. Adjusted EBITDA increased 52% to a record $15.24 billion, while adjusted EPS increased 54% YOY to $2.44, exceeding the $2.40 that analysts had expected.
However, the company’s outlook came in below expectations. Broadcom expects an AI revenue of $16 billion for the third quarter, missing analyst estimates of around $17.30 billion. Moreover, it reiterated the more than $100 billion AI revenue target for fiscal 2027, a figure already priced in by the market.
Wall Street analysts are optimistic about Broadcom’s future earnings. They expect the company’s EPS to climb by 117.5% YOY to $2.74 for Q3 FY2026. For fiscal 2026, EPS is projected to surge 77.1% annually to $9.97, followed by a 67.4% growth to $16.69 in fiscal 2027.
Analysts' Thoughts about Broadcom’s Stock
Post Broadcom’s quarterly results, analysts at Jefferies raised the price target on Broadcom from $500 to $550, while maintaining a “Buy” rating on the stock. While the analyst firm cited the company’s mixed quarterly results and subdued guidance, it also acknowledged the solid results. Jefferies noted that gross margins were guided below expectations, given the mix shift to ASICs, and it also sees operating margins improving as AI revenue accelerates.
JPMorgan analysts raised the price target on AVGO from $500 to $580 and maintained an “Overweight” rating, citing its second fiscal quarter results and guidance for the July quarter. The firm also noted the company’s expanding customer base, which includes Alphabet's (GOOG) (GOOGL) Google, Anthropic, OpenAI, and Meta Platforms (META).
Analysts at Mizuho also maintained an “Outperform” rating on the stock, while raising the price target from $480 to $530. Analysts pointed out that Broadcom is developing a next-generation XPU that could integrate a CPU and SRAM with Panel Packaging, while also experiencing strong software bookings.
Wall Street analysts are strongly bullish on Broadcom’s stock, with a consensus “Strong Buy” rating. Of the 42 analysts rating the stock, a majority of 34 analysts have given it a “Strong Buy” rating, three analysts suggested “Moderate Buy,” while five analysts are playing it safe with a “Hold” rating. The consensus price target of $514.45 represents a 38.26% upside from current levels. The Street-high price target of $640 represents a 72% potential upside.
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www.barchart.com On the date of publication, Anushka Dutta did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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