Key Takeaways
- Broadcom’s fiscal Q1 results arrive Wednesday, March 4, after the closing bell
- Wall Street projects $2.03 earnings per share on $19.26 billion revenue, versus $1.60 and $14.92 billion year-over-year
- HSBC has dramatically increased AI networking projections — now expecting $17B in FY26 and $30B in FY27
- Despite optimistic forecasts, HSBC reduced its price target from $535 to $450 amid AI sector valuation adjustments
- Market anxiety persists following Nvidia’s 5.5% decline despite exceeding analyst expectations
Broadcom prepares to unveil its fiscal first-quarter results this Wednesday amid elevated analyst forecasts, though market participants remain cautiously positioned.
The semiconductor and software giant is projected to deliver adjusted earnings of $2.03 per share alongside $19.26 billion in revenue. These figures represent substantial increases from the year-ago period’s $1.60 per share and $14.92 billion — demonstrating impressive annual growth momentum.
The semiconductor solutions division is anticipated to be the primary growth engine, with analysts forecasting $12.4 billion in revenue — representing a remarkable 51% year-over-year surge. Meanwhile, the infrastructure software segment is expected to contribute $6.99 billion, marking approximately 4.3% growth.
Broadcom’s artificial intelligence networking operations have emerged as a critical expansion catalyst. The company has previously announced a $20 billion backlog in AI networking, though HSBC’s Frank Lee suggests this number may actually understate future performance.
Lee has updated his AI networking revenue projections for FY26 and FY27 to $17 billion and $30 billion respectively — figures that exceed current Street consensus by 43% and 64%. This substantial divergence highlights the disconnect between Lee’s outlook and prevailing analyst estimates.
However, HSBC simultaneously reduced its price objective from $535 to $450. The adjustment reflects a comprehensive “valuation reset” affecting AI-sector equities. While Lee maintains his Buy recommendation, the lowered target acknowledges shifting market dynamics for the space.
Major Tech Firms Continue AI Investment Push
Analysts maintain their positive stance partly because leading technology companies show no signs of curtailing spending. Ben Reitzes from Melius Research highlighted that both Meta and Alphabet have increased their 2026 capital expenditure guidance by approximately 30%. These infrastructure investments directly benefit suppliers like Broadcom.
“The rationale for spending remains strong,” Reitzes noted, emphasizing that OpenAI and Anthropic have similarly elevated their revenue projections amid accelerating enterprise adoption.
He maintains a Buy rating with a $530 target, characterizing the upcoming report as “another outstanding quarter” driven by expanding order backlog.
Nvidia’s Response Raises Red Flags
Some market observers harbor reservations ahead of Wednesday’s announcement. Nvidia delivered fourth-quarter numbers on February 25 that surpassed expectations and included upbeat forward guidance. Despite this, shares declined 5.5% the following session.
Broadcom experienced sympathetic weakness, dropping 3.2% on February 26. This dynamic — where positive results still trigger selling pressure — has heightened trader vigilance.
Paul Meeks from Freedom Capital Markets voiced his apprehension directly: “I’m a bit anxious about the reaction to AVGO’s quarterly report and guidance on March 4, particularly given the reactions last week to the announcements from other AI bellwethers.”
Valuation metrics compound these concerns. Broadcom currently commands a 26.9x forward earnings multiple, 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 year-to-date. While shares have climbed 64% over the trailing twelve months, they’ve declined 9% in 2026.
HSBC’s Lee identified AI networking expansion developments as the next significant catalyst beyond quarterly results, given Broadcom’s accelerating market position in this segment.
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