Broadcom (AVGO) Stock Jumps After Blowout Quarter and Big AI Guidance

TLDR

• Broadcom jumped ~7% pre-market after forecasting AI chip sales above $100 billion in 2027.
• Q1 FY2026 revenue hit $19.3 billion, up 29% year-over-year, beating consensus.
• AI semiconductor revenue reached $8.4 billion in Q1, with $10.7 billion projected for Q2.
• Q2 revenue guidance of $22 billion came in well above the $20.56 billion analyst estimate.
• Truist reiterated a Buy rating with a $510 price target following the earnings beat.

Broadcom pre-market surged roughly 7% on Thursday after the chipmaker projected AI chip revenue topping $100 billion in 2027, making a direct challenge to Nvidia’s dominance in the space.

The company reported Q1 fiscal 2026 revenue of $19.31 billion, a 29% jump year-over-year. That edged past the consensus estimate of $19.26 billion, with the semiconductor segment outperforming by 0.9%.

AI semiconductor revenue came in at $8.4 billion for the quarter, slightly ahead of Truist’s model of $8.2 billion. The software segment was the one soft spot, missing consensus by 2.8%.

Broadcom Inc., AVGO

Earnings per share of $2.05 beat the unguided consensus of $2.03. EBITDA landed at $13.13 billion, or 68% of revenues — 2.9% above analyst expectations and 100 basis points above Broadcom’s own guidance.

Operating margin came in at 66.4%, 70 basis points above the consensus of 65.7%.

Big AI Commitments in the Pipeline

Broadcom said it plans to deliver 3 gigawatts of tensor processing units to Anthropic in 2027. It also plans to ship OpenAI’s first custom AI chip — delivering over 1 gigawatt — in the same year.

Those volumes put Broadcom closer to the scale seen in recent AI chip deals done by Nvidia and AMD.

Q2 revenue guidance came in at $22 billion, about 7.3% above the Street’s estimate of $20.5 billion. AI chip revenue for the April quarter is projected at $10.7 billion — 11.5% above Truist’s model of $9.6 billion.

Broadcom also announced a new share repurchase program of up to $10 billion through the end of the year.

Analyst Reaction

Truist Securities reiterated its Buy rating and $510 price target after the results. The broader analyst consensus sits at a strong buy, with price targets ranging from $335 to $530.

RBC Capital took a more cautious stance, lowering its price target to $340 from $370 while maintaining a Sector Perform rating, citing concerns about AI demand.

UBS kept its Buy rating, pointing to the semiconductor segment’s valuation metrics.

Despite the pre-market pop, AVGO is still down about 8.3% year-to-date. Nvidia, by comparison, is down roughly 2% over the same period.

Broadcom recently began shipping what it calls the industry’s first 2nm custom compute chip on its 3.5D platform. The company also launched the BroadPeak chip, aimed at next-generation 5G and 6G networks, promising up to 40% power reduction.

Inventory increased roughly 9 days quarter-over-quarter to around 60 days, above the typical seasonal decline of about 1 day — something analysts will likely watch in coming quarters.

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