Broadcom (AVGO) Stock Soars on Massive AI Revenue Forecast and Strong Earnings

Key Takeaways

• Shares of Broadcom climbed approximately 7% in pre-market hours following a projection of over $100 billion in AI chip revenue for 2027.
• First quarter fiscal 2026 revenue totaled $19.3 billion, marking a 29% increase from the prior year and exceeding analyst expectations.
• The company generated $8.4 billion in AI semiconductor revenue during Q1, with expectations of $10.7 billion for the upcoming quarter.
• Management issued Q2 revenue guidance of $22 billion, significantly higher than the Street’s forecast of $20.56 billion.
• Following the earnings release, Truist maintained its Buy rating with a $510 target price on the stock.

Shares of Broadcom experienced a substantial pre-market rally of around 7% Thursday morning following the semiconductor giant’s announcement of AI chip sales expected to surpass $100 billion by 2027, positioning itself as a formidable competitor to Nvidia in the artificial intelligence market.

The semiconductor and software company delivered first quarter fiscal 2026 revenue of $19.31 billion, representing a year-over-year increase of 29%. This figure narrowly surpassed Wall Street’s consensus forecast of $19.26 billion, with particularly strong performance in the semiconductor division, which beat estimates by 0.9%.

Revenue from AI semiconductors totaled $8.4 billion during the period, marginally exceeding Truist’s projection of $8.2 billion. The software division represented the sole area of weakness, falling short of consensus expectations by 2.8%.

Broadcom Inc., AVGO

The company posted earnings per share of $2.05, surpassing the unguided consensus estimate of $2.03. EBITDA reached $13.13 billion, representing 68% of total revenues — coming in 2.9% above Wall Street projections and 100 basis points higher than the company’s internal guidance.

Operating margin registered at 66.4%, exceeding the analyst consensus of 65.7% by 70 basis points.

Major AI Partnerships Drive Growth Outlook

The company disclosed plans to supply 3 gigawatts of tensor processing units to Anthropic during 2027. Additionally, Broadcom expects to manufacture and ship OpenAI’s inaugural custom AI chip — exceeding 1 gigawatt — within the same timeframe.

These production volumes position Broadcom at a competitive scale comparable to recent AI chip contracts secured by Nvidia and AMD.

For the second quarter, management provided revenue guidance of $22 billion, representing a 7.3% premium to Wall Street’s $20.5 billion estimate. AI chip revenue for the April quarter is forecast at $10.7 billion — 11.5% higher than Truist’s model of $9.6 billion.

Broadcom additionally unveiled a fresh share buyback authorization of up to $10 billion extending through year-end.

Wall Street Weighs In

Truist Securities maintained its Buy rating and $510 price target following the quarterly report. The broader analyst community maintains a strong buy consensus, with price objectives spanning from $335 to $530.

RBC Capital adopted a more conservative position, reducing its price target from $370 to $340 while keeping a Sector Perform rating, expressing reservations about artificial intelligence demand sustainability.

UBS retained its Buy recommendation, highlighting favorable valuation metrics within the semiconductor business segment.

Despite the strong pre-market advance, AVGO shares remain down approximately 8.3% for the year. Nvidia, in contrast, has declined roughly 2% during the same timeframe.

The company recently commenced shipments of what it describes as the industry’s inaugural 2nm custom compute chip built on its 3.5D platform. Broadcom also introduced the BroadPeak chip, designed for next-generation 5G and 6G network infrastructure, offering up to 40% reduction in power consumption.

Inventory levels rose by approximately 9 days sequentially to around 60 days, exceeding the typical seasonal decrease of roughly 1 day — a metric that analysts are expected to monitor closely in subsequent quarters.

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