Key Takeaways:
- Broadcom reports Q2 FY2026 earnings Wednesday, June 3 after market close.
- Consensus expects $22.1B revenue (+47% YoY) and EPS of $2.40 (+52% YoY).
- HSBC raised its price target to $600, citing an ASIC revenue ramp in 2H FY26.
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Broadcom targets $22B in revenue as AI chip demand surges
Broadcom heads into its fiscal Q2 report targeting $22.1 billion in revenue as AI chip and networking demand accelerates.
"We expect ASIC revenue momentum to pick up meaningfully from 2H FY26 as Broadcom begins supplying Google's TPU v7 and Meta ramps its ASIC," Frank Lee, Global Head of Tech Hardware & Semi Research at HSBC, said.
Analysts surveyed by Yahoo! Finance project adjusted EPS of $2.40, up 52% from a year earlier. The Street expects AI semiconductor revenue of $10.7 billion for the April quarter, according to Jefferies. HSBC sees third-quarter revenue reaching $30.7 billion, 7% ahead of the $28.6 billion consensus.
Shares of the $2.1 trillion chipmaker have gained nearly 30% year-to-date. The Q2 print and Q3 guidance will test whether the stock's 40.2 times forward earnings can hold as ASIC programs from Google, Meta, Anthropic and OpenAI begin contributing in the second half.
Of the 47 analysts covering AVGO, 44 rate it a Buy, with three Holds and no Sells, according to S&P Global Market Intelligence data. The average 12-month price target of $480 implies about 7.5% upside from Friday's close.
HSBC's Lee raised his ASIC revenue estimates to $46 billion for fiscal 2026 and $100.2 billion for fiscal 2027 — 23% and 26% above Street forecasts. He also lifted his AI networking revenue estimate to $40.2 billion, citing the transition from 800-gigabit to 1.6-terabit ethernet switches.
Jefferies analysts expect "a modest beat and raise" with third-quarter guidance of $29 billion, driven by AI networking growth. Morgan Stanley's Joe Moore, who rates the stock Overweight with a $485 price target, sees AI revenue climbing from $10.8 billion in Q2 to $16.9 billion in Q3.
Not all analysts are uniformly bullish on near-term timing. Susquehanna's Christopher Rolland lowered his fiscal 2026 AI revenue estimate to about $55 billion from $62.5 billion after reducing expectations for a major Anthropic-related chip program. UBS's Timothy Arcuri similarly adjusted Anthropic revenue forecasts, though he expects Broadcom to still deliver revenue above Wall Street estimates.
The guidance raise expected by multiple analysts shows management's confidence that AI demand will accelerate through the second half. Investors will focus on Wednesday's earnings call for updated ASIC program timelines and gross margin trajectory.
This article is for informational purposes only and does not constitute investment advice.
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