Key Takeaways
- UBS analyst Timothy Arcuri increased his price target for AVGO from $475 to $490, suggesting approximately 17% potential upside.
- The company’s fiscal Q2 earnings release is scheduled for June 3.
- Revenue projections tied to Anthropic were reduced following Broadcom’s transition from full-rack systems to standardized ASIC configurations.
- UBS still anticipates Broadcom will surpass the Street’s revenue guidance estimate of approximately $22 billion.
- Wall Street maintains a Strong Buy rating on AVGO, with 26 Buy recommendations and four Hold ratings in recent months.
Ahead of Broadcom’s (AVGO) fiscal second-quarter earnings announcement set for June 3, UBS has increased its price target to $490 from the previous $475. Five-star analyst Timothy Arcuri maintains his optimistic outlook, projecting around 17% growth potential from present trading levels, even as he adjusts certain revenue projections downward.
Shares of AVGO have climbed 23% since the beginning of the year, currently hovering near $410, following a challenging early 2026 period that witnessed approximately 15% declines through March.
The stock has experienced strong momentum throughout April, though Arcuri’s recent analysis reveals a more complex underlying story.
The adjustment centers on Broadcom’s approach to chip deliveries for Anthropic. The semiconductor giant transitioned from complete rack-based AI systems to more standardized ASIC configurations. While this might appear counterintuitive, the revised approach actually delivers superior profit margins.
However, this strategic pivot has tempered the initial acceleration timeline. Arcuri reduced his Anthropic-specific revenue projection for 2026 to approximately $8 billion, a significant decrease from the earlier $21 billion forecast. His 2027 projection was marginally adjusted to $22 billion from $23 billion.
Additionally, he lowered his comprehensive fiscal 2027 AI revenue outlook for AVGO to $133 billion from $145 billion, while making a slight downward revision to his 2027 earnings-per-share forecast to $21.14.
UBS Maintains Optimistic Outlook
Despite these reductions, Arcuri remains confident in his investment thesis. He continues to anticipate Broadcom will deliver Q2 revenue guidance exceeding Wall Street’s consensus forecast of approximately $22 billion.
His projections indicate AI-related revenue could reach $13.6 billion in Q3 alone — a figure that would position Broadcom favorably for an impressive annual total.
CEO Hock Tan has highlighted $100 billion in AI revenue as a viable objective for 2027. This would mark a fivefold expansion from the $20 billion Broadcom generated from AI operations last year.
Arcuri’s elevated price target also accounts for broader semiconductor sector valuation growth. The recent industry-wide rally has expanded multiples throughout the chip sector, providing justification for the increased target despite moderated underlying forecasts.
XPU Technology Remains in Growth Phase
Broadcom’s XPU chips — specialized silicon engineered for AI inference applications — continue their expansion trajectory. The company maintains partnerships with Alphabet, Anthropic, OpenAI, and Meta Platforms, with each implementation tailored to individual client specifications.
Inference operations, where AI models execute practical applications rather than undergo training, are projected to expand as artificial intelligence adoption becomes more widespread. This represents a favorable trend that hasn’t fully materialized in financial results yet.
Broadcom recorded total revenue of $63.9 billion in 2025. Should the $100 billion AI revenue objective come to fruition, it would represent more than double the company’s current scale.
Wall Street projections estimate Broadcom’s earnings expanding at a 41% annual rate over the coming three to five years.
AVGO’s price-to-earnings multiple has expanded from below 60 to above 80 during the recent uptrend, placing the PEG ratio around 2 — not particularly cheap, but analysts maintain the growth trajectory warrants the valuation.
Broadcom maintains a Strong Buy consensus rating based on 26 Buy recommendations and four Hold ratings issued during the past three months. The mean analyst price target stands at $477.81.
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