Broadcom Inc.

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Broadcom Inc. stock analysis AVGO overview
Bullish +75

AVGO: HSBC Hikes Broadcom Price Target Ahead of Q2 Earnings

📅 Broadcom (AVGO) is scheduled to report its fiscal second-quarter earnings after the close on Wednesday, June 3.

📈 Analysts surveyed by Yahoo! Finance expect revenues of $22.1 billion, representing a 47% year-over-year increase.

💰 Adjusted earnings per share are projected at $2.40, which would be a 52% increase compared to the prior year.

🤝 Of the 47 analysts covering AVGO, 44 recommend a Buy rating while only three hold a Hold rating with no Sells.

📉 The average 12-month price target of $482 implies about 8% upside from current levels despite a nearly 30% year-to-date share jump.

🚀 HSBC Global Investment Research raised its price target to $600, citing significant AI revenue growth expected in the second half of 2026.

🤖 Frank Lee of HSBC expects ASIC revenue momentum to pick up as Broadcom supplies Google's TPU v7 and ramps Meta's ASIC deployments.

📦 HSBC raised its ASIC revenue estimates to $46 billion for 2026 and $100.2 billion for 2027, both higher than Street consensus.

🌐 AI networking is identified as a key re-rating driver with Broadcom leading the ethernet switching market in the transition from 800G to 1.6T switches.

💼 Jefferies analysts expect a modest beat and raise, projecting third-quarter revenue guidance of $29 billion driven by AI networking growth.

📊 Morgan Stanley analyst Joe Moore forecasts AI revenues growing from $10.8 billion in Q2 to $16.9 billion in the third quarter.

🔭 All major analysts surveyed expect significant AI revenue growth for 2027, with estimates ranging from $120 billion to $124 billion.

📈 Broadcom's current AI market share is roughly 10%, which analysts believe has room to grow over time as ASIC programs ramp.

Bullish Signals
  • HSBC Global Investment Research raised its price target to $600, representing 34% upside from Friday's closing price, while reiterating a Buy call on Broadcom (AVGO).
  • Analysts surveyed by Yahoo! Finance expect Q2 revenues of $22.1 billion (+47% year-over-year) and adjusted EPS of $2.40 (+52% YoY), indicating strong performance ahead of earnings.
  • Of the 47 analysts covering AVGO, 44 rate it as a Buy versus just three Holds and no Sells, reflecting overwhelming bullish sentiment from the research community.
  • Analysts project robust long-term earnings growth of 41% annually over the next three to five years, signaling confidence in sustained demand.
  • HSBC expects ASIC revenue momentum to pick up meaningfully in H2 FY26 as Broadcom supplies Google's TPU v7 and Meta ramps its ASIC, with shipments to customers four and five expected to more than double in FY27.
  • Frank Lee at HSBC hiked his ASIC revenue estimates to $46 billion for 2026 and $100.2 billion for 2027, which are 23% and 26% higher than Street estimates respectively.
  • HSBC now expects Q3 revenues of $30.7 billion, which is 7% ahead of consensus estimates of $28.6 billion, driven by AI networking demand and the transition from 800G to 1.6T switches.
  • Jefferies analysts expect AVGO's third-quarter revenue guidance to come in at $29 billion, driven largely by growth in the AI networking business, with a Buy rating and $500 price target (12% upside).
  • Morgan Stanley analyst Joe Moore expects AI revenues to grow from $10.8 billion in Q2 to $16.9 billion in Q3, with an Overweight rating and raised price target of $485 per share (9% upside).
  • Analysts anticipate AI revenue reaching $124 billion in 2027 versus management's prior guidance of $100 billion, indicating significant upside potential as ASIC programs ramp.
Risk Factors
  • The stock has already rallied nearly 30% year-to-date, suggesting much of the positive sentiment may be priced in ahead of earnings.
  • Analysts expect only about 8% upside from current levels despite a bullish consensus, indicating limited remaining margin for error.
  • Broadcom's forward P/E ratio is high at 40.2x, which could make the stock vulnerable to valuation compression if growth slows.
  • The company has a low dividend yield of 0.60%, offering minimal income support relative to its high valuation.
  • Analysts are looking for Q3 revenue guidance around $29 billion, but any miss on AI networking or ASIC ramp could lead to a significant sell-off.
  • Morgan Stanley analyst Joe Moore is not convinced the upcoming quarter will be a major beat-and-raise, signaling potential disappointment risks.
  • The company's reliance on AI-driven growth means that any slowdown in AI infrastructure spending could materially impact future revenue forecasts.
Full Analysis
Broadcom (AVGO) is scheduled to report its fiscal second-quarter earnings after the close on Wednesday, June 3, with analysts expecting a significant beat based on revenue of $22.1 billion and adjusted EPS of $2.40. HSBC Global Investment Research has reiterated its Buy rating and raised its price target to $600, citing anticipated AI revenue growth in the second half of fiscal 2026 as the primary driver. Frank Lee, Global Head of Tech Hardware & Semi Research at HSBC, forecasts ASIC revenue momentum will increase as Broadcom supplies Google's TPU v7 and ramps up Meta's ASIC deployments, with shipments to these customers expected to more than double by fiscal 2027. Lee has raised his ASIC revenue estimates to $46 billion for 2026 and $100.2 billion for 2027, significantly higher than Street consensus, and anticipates third-quarter revenues of $30.7 billion driven by AI networking demand and the transition from 800G to 1.6T switches. Other analysts including Jefferies and Morgan Stanley also maintain Buy ratings with price targets ranging from $485 to $500, projecting continued growth in AI revenue through fiscal 2027 as Broadcom expands its market share in high-speed networking and optical technologies.