Quick Summary
- Broadcom delivers Q1 FY2026 results on March 4, following the closing bell
- Analyst consensus calls for $19.1 billion revenue, reflecting ~28% annual increase; adjusted EPS projected at $2.03
- Margin compression represents the primary investor worry — AI products generate thinner margins compared to legacy segments
- Average Wall Street price objective stands at ~$433, while post-December forecasts cluster around ~$458
- UBS maintains Buy recommendation with $475 target; DA Davidson launches coverage with Neutral stance
Broadcom will unveil its Q1 FY2026 financial performance on March 4, following the market’s close.
The shares have experienced significant volatility recently. Following its December 2025 quarterly update, AVGO plunged from above $400 to approximately $340 within days, staged a modest rebound toward $355, before sliding beneath $310 in early February. Currently, the stock hovers near $330.
This represents a decline exceeding 15% since the previous earnings release — even as most analysts maintain optimistic price projections.
Analysts are modeling Q1 revenue at $19.1 billion, aligning with Broadcom’s published guidance. This figure would represent 28% year-over-year expansion.
The adjusted EPS consensus stands at $2.03, indicating approximately 26% growth. Broadcom typically refrains from providing explicit adjusted EPS guidance, though the company historically offers conservative projections.
The semiconductor giant has matched or exceeded revenue forecasts in 22 of its previous 24 quarterly reports, and surpassed adjusted EPS expectations in 23 of those same 24 periods. This consistency speaks volumes.
However, surpassing consensus figures doesn’t automatically translate to stock appreciation. Market sentiment will depend heavily on Q2 outlook, margin trajectory commentary, and management’s tone during the conference call.
Margin Trajectory Under Scrutiny
The primary concern surrounding this earnings event centers on gross margin performance.
During the previous quarter, Broadcom delivered a gross margin approaching 78% — ranking among the strongest profitability metrics for any major U.S. semiconductor company. Yet management indicated that Q1 gross margin would decline approximately 100 basis points sequentially, attributed to an increased proportion of AI revenue.
The dynamic is clear: AI-focused chip products generate lower gross margins relative to traditional product lines. As artificial intelligence segments expand more rapidly than legacy operations, the consolidated margin profile deteriorates.
Market participants will monitor whether gross margin lands around 77% or higher. Analysts are expected to probe for additional insights regarding how much further margins might compress throughout the remainder of FY2026.
Current Q2 FY2026 projections anticipate $20.35 billion in revenue — representing approximately 36% year-over-year expansion. Adjusted EBITDA margin estimates for Q2 sit at 68.5%, consistent with Broadcom’s own guidance framework.
Analyst Sentiment and Price Targets
Despite the stock’s recent weakness, Wall Street has largely maintained its bullish posture.
The consensus price target hovers around $433, suggesting approximately 30% appreciation potential from present levels. Price objectives established following the December report average roughly $458 — implying about 38% upside.
Citigroup recently adjusted its target downward from $480 to $458, representing the sole downward revision tracked by MarketBeat since the December earnings announcement.
UBS reaffirmed its Buy recommendation with a $475 price target on February 24. The investment bank observed that Broadcom’s semiconductor operations trade at 20x P/E, 23x EV/free cash flow, and 17x EV/EBITDA — each metric approximately one turn richer than Nvidia and comparable companies. UBS additionally highlighted potential VMware customer attrition risks in 2026 and 2027 as three-year contracts approach renewal.
DA Davidson launched coverage with a Neutral assessment, expressing reservations about Broadcom’s sustainable competitive positioning within the AI ASIC marketplace.
Jefferies reconfirmed a Buy rating, emphasizing Broadcom’s strategic advantages in AI infrastructure and networking sectors.
On the product development front, Broadcom recently introduced the BroadPeak chip, manufactured using 5nm CMOS process technology and designed for next-generation 5G and 6G network infrastructure. The company projects up to 40% energy efficiency improvements compared to current market alternatives.
Separately, a German court mandated that Renault suspend sales of its Megane and Clio vehicle models following a patent infringement dispute with Broadcom concerning ethernet network cable connection technology.
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