TLDR
- Broadcom’s Q1 FY2026 results arrive March 4, following the closing bell
- Analyst estimates call for $19.1 billion in revenue (~28% YoY increase) and $2.03 adjusted EPS
- Margin compression represents the primary risk — artificial intelligence sales generate thinner margins than legacy products
- Street consensus targets hover around $433, while post-December analyst updates cluster near $458
- UBS maintains Buy rating at $475 target; DA Davidson opens coverage with Neutral stance
Broadcom will unveil its Q1 FY2026 financial results on March 4, following the market’s close.
The chipmaker has endured a volatile period recently. Following its December 2025 earnings release, AVGO plummeted from above $400 to approximately $340 within days, staged a modest rebound toward $355, then tumbled beneath $310 by early February. Current trading levels sit around $330.
That represents more than a 15% decline since the previous quarterly report — even as Wall Street analysts maintain predominantly optimistic price projections.
Analysts anticipate Q1 revenue reaching $19.1 billion, aligning with Broadcom’s own projections. This figure would represent 28% year-over-year expansion.
Adjusted earnings per share consensus stands at $2.03, reflecting approximately 26% growth. Broadcom typically refrains from providing adjusted EPS guidance directly, though the company historically offers conservative forecasts.
The semiconductor giant has exceeded or matched revenue projections in 22 of its previous 24 quarterly reports, while surpassing adjusted EPS expectations in 23 of those 24 quarters. This consistency speaks volumes about execution.
However, exceeding estimates offers no guarantee of positive stock momentum. Market response will depend heavily on Q2 projections, margin commentary, and management’s tone during the conference call.
The Gross Margin Question
The primary concern surrounding this earnings release centers on gross margin performance.
Last quarter, Broadcom delivered a gross margin approaching 78% — ranking among the strongest of any major U.S. semiconductor company. However, management warned that Q1 gross margin would decline approximately 100 basis points sequentially, attributed to an increased proportion of AI-related revenue.
The dynamics are clear: artificial intelligence chip sales generate lower gross margins compared to traditional product lines. As AI segments expand faster than other business units, the consolidated margin profile deteriorates.
Investors will scrutinize whether gross margin lands near 77% or maintains better performance. Analysts will undoubtedly seek transparency regarding how significantly margins might compress throughout the remainder of FY2026.
Q2 FY2026 projections currently anticipate $20.35 billion in revenue — representing roughly 36% year-over-year expansion. Adjusted EBITDA margin estimates for Q2 stand at 68.5%, reflecting Broadcom’s own guidance framework.
Where Analysts Stand
Despite the stock’s recent weakness, Wall Street has largely maintained its optimistic outlook.
The consensus price target rests near $433, suggesting approximately 30% appreciation potential from present levels. Price targets established following the December report average around $458 — implying roughly 38% upside potential.
Citigroup recently adjusted its target downward from $480 to $458, representing the sole negative revision tracked by MarketBeat since the December earnings event.
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 approximately one turn more expensive than Nvidia and comparable peers. UBS additionally highlighted potential VMware customer attrition risks in 2026 and 2027 as three-year agreements approach renewal.
DA Davidson launched coverage with a Neutral rating, expressing reservations about Broadcom’s long-term competitive positioning in the AI ASIC marketplace.
Jefferies confirmed its Buy rating, emphasizing Broadcom’s strategic positioning across AI and networking sectors.
On the product development front, Broadcom recently introduced the BroadPeak chip, manufactured using 5nm CMOS process technology and designed for advanced 5G and 6G network applications. The company projects up to 40% power efficiency improvements compared to existing solutions.
A German court additionally mandated that Renault cease sales of its Megane and Clio models following a patent infringement dispute with Broadcom concerning ethernet network cable connectivity.
