Key Takeaways
- Investment bank Citi has increased Broadcom’s price target to $500 from $475 while maintaining its Buy recommendation
- The firm designated AVGO as its “#1 semis pick in 2026” with Q2 earnings scheduled for June 3
- Artificial intelligence revenue is expected to surge from approximately 49% of overall revenue to roughly 81% by the fourth quarter of fiscal 2028
- The semiconductor giant serves six key AI clients, including Google, Meta, Anthropic, and OpenAI
- Analysts maintain a Strong Buy rating with a consensus price target of $468.79
Investment firm Citi has increased its price objective for Broadcom to $500 per share from its previous $475 target, positioning the move ahead of the company’s fiscal second-quarter financial results scheduled for June 3.
The financial institution maintained its Buy recommendation while designating AVGO as its premier semiconductor selection for 2026.
Shares of Broadcom were changing hands near $410 on Tuesday, experiencing a decline exceeding 4% during the trading session.
Atif Malik, an analyst ranked third among Wall Street equity researchers, anticipates that April and July quarter revenues and earnings per share will slightly exceed market expectations. He identifies sustained AI demand as the primary catalyst.
Citi’s revised $500 price objective utilizes a 20x valuation multiple against its fiscal 2028 earnings per share forecast of $25. The firm indicates that projecting forward to that fiscal year demonstrates “increased earnings visibility.”
Artificial Intelligence Revenue Poised for Substantial Expansion
Malik forecasts that AI-related revenue will expand from approximately 49% of Broadcom’s total revenue currently to about 81% by the fourth quarter of fiscal 2028.
He currently anticipates Google and Anthropic together will generate roughly $80 billion in AI-linked revenue. Overall AI sales are projected to reach $115 billion in 2027, an increase from the previous $100 billion estimate, before advancing to $180 billion in 2028.
Broadcom presently services six principal AI customers: Google, Meta, Anthropic, OpenAI, and two unnamed clients that Malik suspects include ByteDance. The semiconductor company is additionally collaborating with three other customers on bespoke AI chip development.
The analyst adjusted FY26, FY27, and FY28 earnings per share projections by -4%, +5%, and +34% respectively. These modifications account for enhanced TPU shipment forecasts and a transformation in the Anthropic collaboration from rack deliveries to chip deliveries.
Chip sales deliver superior gross profit margins, although they represent merely approximately 20%–25% of rack revenue value.
Competitive Landscape and Software Operations
Regarding competitive dynamics, Malik indicates that a five-year extended partnership with Google should alleviate worries about Google developing proprietary chip alternatives. He maintains that competitors would face significant challenges matching the technology capabilities.
Citi additionally dismissed concerns surrounding Broadcom’s enterprise software operations, characterizing such worries as “overblown.”
The software division maintains deep integration within major organizations, especially enterprises exceeding 10,000 employees. Malik observes minimal evidence of clients transitioning to rival platforms.
Enterprise security constitutes only a modest portion of current revenue, but Malik notes its expanding significance as corporations increasingly prioritize infrastructure protection during the agentic AI era.
Wall Street analysts largely share this optimistic outlook. Broadcom maintains a Strong Buy consensus rating with 25 Buy recommendations and 4 Hold ratings. The average analyst price target stands at $468.79, suggesting approximately 12% potential upside from present trading levels.
Broadcom is scheduled to release fiscal Q2 earnings results on June 3.
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