Broadcom (AVGO) Stock Earnings Preview: AI Growth vs. Valuation Concerns

Key Takeaways

• Broadcom’s fiscal Q1 earnings arrive Wednesday, March 4, after the closing bell
• Wall Street consensus calls for $2.03 earnings per share and $19.26 billion in revenue, compared to $1.60 and $14.92 billion last year
• HSBC has dramatically increased AI networking projections — estimating $17B in FY26 and $30B in FY27
• Despite optimistic forecasts, HSBC lowered its price target from $535 to $450 while maintaining a Buy rating due to AI sector valuation adjustments
• Market participants remain wary following Nvidia’s 5.5% decline after earnings, despite the company exceeding expectations

As Wednesday’s market close approaches, Broadcom prepares to unveil its fiscal first-quarter results amid elevated expectations but tempered investor enthusiasm.

Broadcom Inc., AVGO

Wall Street anticipates the semiconductor and software giant will deliver adjusted earnings of $2.03 per share alongside revenue totaling $19.26 billion. These figures represent substantial gains compared to the year-ago period’s $1.60 per share and $14.92 billion — demonstrating robust annual expansion.

The semiconductor solutions division is projected to drive performance, with analysts forecasting $12.4 billion in revenue — representing a 51% surge from last year’s corresponding quarter. Meanwhile, the infrastructure software segment should contribute approximately $6.99 billion, marking a 4.3% increase.

Broadcom’s artificial intelligence networking division has emerged as a critical expansion engine. After previously announcing a $20 billion AI networking backlog, HSBC’s Frank Lee suggests this figure may actually understate future demand.

Lee has updated his fiscal 2026 and 2027 AI networking revenue projections to $17 billion and $30 billion respectively — figures that exceed current Street consensus by 43% and 64%. This substantial divergence highlights the gap between HSBC’s outlook and broader market expectations.

Yet despite this positive assessment, HSBC reduced its price objective from $535 to $450. The rationale centers on an industry-wide “valuation reset” affecting AI-focused enterprises. While Lee maintained his Buy recommendation, the target reduction reflects recalibrated sector pricing.

Technology Giants Continue AI Infrastructure Investments

Analyst confidence persists partly because major technology companies show no signs of reducing expenditures. Melius Research’s Ben Reitzes highlighted that Meta and Alphabet each boosted their 2026 capital spending plans by approximately 30%. These infrastructure investments directly benefit providers like Broadcom.

He assigns AVGO a Buy rating with a $530 price objective, characterizing the upcoming report as “another outstanding quarter” based on expanding backlog figures.

Nvidia’s Reaction Creates Uncertainty

Not all market observers approach the earnings release with confidence. Nvidia delivered fourth-quarter results on February 25 that surpassed forecasts and provided robust forward guidance. Despite this performance, shares tumbled 5.5% the following session.

Broadcom experienced sympathetic weakness on February 26, declining 3.2%. This dynamic — where positive results still trigger selling pressure — has heightened trader apprehension.

Valuation metrics compound these concerns. Broadcom currently commands a forward earnings multiple of 26.9x, exceeding both Nvidia’s 21.3x and AMD’s 25.7x ratios.

UBS’s Timothy Arcuri observed that recent software sector weakness has contributed to Broadcom’s relative underperformance this year. While shares have climbed 64% over the trailing twelve months, they’ve retreated 9% in 2026.

HSBC’s Lee identified the next significant catalyst beyond quarterly results as any favorable developments surrounding AI networking expansion, reflecting Broadcom’s accelerating presence in this market segment.

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