Citi Elevates Broadcom (AVGO) to Top Semiconductor Stock for 2026

Key Takeaways

Table of Contents

Citi elevated Broadcom’s price objective to $500 from $475 while reaffirming its Buy recommendation
The firm designated AVGO as its premier semiconductor selection for 2026 prior to Q2 results scheduled for June 3
Artificial intelligence revenue is expected to surge from approximately 49% of overall revenue currently to roughly 81% by the end of fiscal 2028
The company serves six primary AI partners, including Google, Meta, Anthropic, and OpenAI
Analyst consensus stands at Strong Buy with a mean price objective of $468.79

Citi has upgraded its price objective for Broadcom shares to $500, marking an increase from the previous $475 target, as the company prepares to unveil its fiscal second-quarter financial results on June 3.

Broadcom Inc., AVGO

The investment bank maintained its Buy recommendation while positioning AVGO as its premier semiconductor investment opportunity for 2026.

Shares of Broadcom were changing hands near $410 during Tuesday’s session, representing a decline exceeding 4% for the day.

Atif Malik, an analyst ranked third among Wall Street equity researchers, anticipates that both April and July quarter revenues and earnings per share will exceed market expectations by a modest margin. He identifies ongoing AI demand as the primary catalyst.

Citi’s revised $500 price objective applies a 20x valuation multiple to its fiscal 2028 earnings per share projection of $25. The firm indicates that extending the valuation horizon to that fiscal year accounts for “enhanced earnings predictability.”

Artificial Intelligence Revenue Poised for Dramatic Expansion

Malik forecasts that AI-related revenue will expand from approximately 49% of Broadcom’s total sales presently to about 81% by the conclusion of fiscal Q4 2028.

He currently anticipates that Google and Anthropic together will generate approximately $80 billion in AI-focused revenue. Overall AI revenue is projected to reach $115 billion during 2027, an increase from the earlier $100 billion estimate, before advancing to $180 billion in 2028.

Broadcom presently serves six principal AI customers: Google, Meta, Anthropic, OpenAI, and two unnamed partners Malik suspects include ByteDance. The corporation is additionally collaborating with three emerging customers on customized AI semiconductor development.

The analyst adjusted FY26, FY27, and FY28 earnings per share projections by -4%, +5%, and +34% in succession. These modifications incorporate enhanced TPU delivery assumptions and a transformation in the Anthropic collaboration from rack-level shipments to chip-level shipments.

Semiconductor revenue generates superior gross profit margins, although it accounts for merely approximately 20%–25% of the equivalent rack-level revenue value.

Competition Concerns and Software Operations

Regarding competitive dynamics, Malik indicates that a five-year extended partnership with Google should mitigate worries about Google developing proprietary chip alternatives. He contends that competitors would face significant challenges in bridging the technological advantage gap.

Citi additionally dismissed concerns surrounding Broadcom’s enterprise software operations, characterizing apprehensions as “exaggerated.”

The software division maintains deep integration within major organizations, especially enterprises exceeding 10,000 employees. Malik observes minimal evidence of clients transitioning to alternative platforms.

Enterprise security currently represents a modest revenue portion, though Malik notes its expanding significance as organizations emphasize infrastructure protection during the agentic AI transition.

Wall Street largely shares this perspective. Broadcom maintains a Strong Buy rating consensus with 25 Buy recommendations and 4 Hold ratings. The consensus price objective stands at $468.79, suggesting approximately 12% appreciation potential from present trading levels.

Broadcom will release fiscal Q2 financial results on June 3.

✨ Limited Time Offer