Key Takeaways
- UBS analyst Timothy Arcuri upgraded his AVGO price target to $490 from $475, suggesting approximately 17% potential gains from present trading levels.
- The semiconductor company will release fiscal Q2 earnings results on June 3.
- Arcuri reduced Anthropic revenue projections following Broadcom’s transition from full-rack systems to standardized ASIC chip configurations.
- UBS anticipates Broadcom will surpass Wall Street’s approximately $22 billion revenue guidance consensus.
- AVGO maintains a Strong Buy rating among analysts, with 26 Buy recommendations and four Hold ratings in the last three months.
UBS has increased its price objective for Broadcom (AVGO) to $490 from the previous $475 target, just days before the company unveils its fiscal second-quarter financial results on June 3. The upgrade originates from five-star analyst Timothy Arcuri, who identifies approximately 17% upside potential from current price levels, even after reducing certain revenue projections.
AVGO stock has climbed 23% in 2026 year-to-date, currently trading near $410, recovering from a challenging start to the year when shares dropped roughly 15% through the end of March.
Shares have surged since April, though Arcuri’s recent analysis reveals a more complex situation beneath the surface.
The adjustment centers on how Broadcom is handling chip deliveries for Anthropic. The chipmaker transitioned away from full-rack AI infrastructure to more standardized ASIC designs. While this might appear as a setback, the revised configuration actually delivers superior profit margins.
However, the transition does decelerate the initial growth phase. Arcuri reduced his Anthropic-specific revenue projection for 2026 to approximately $8 billion, substantially below his earlier $21 billion forecast. His 2027 projection was modestly adjusted to $22 billion from $23 billion.
He additionally lowered his comprehensive fiscal 2027 AI revenue outlook for AVGO to $133 billion from $145 billion, and marginally decreased his 2027 earnings-per-share forecast to $21.14.
Why UBS Maintains Optimism
Despite these reductions, Arcuri remains confident in the investment thesis. He continues to anticipate Broadcom will deliver Q2 revenue guidance exceeding Wall Street’s consensus estimate of approximately $22 billion.
He forecasts AI revenue will reach $13.6 billion in Q3 independently — a figure that would sustain Broadcom’s trajectory toward an impressive annual result.
CEO Hock Tan has identified $100 billion in AI revenue as a realistic target for 2027. That would mark a fivefold expansion from the $20 billion Broadcom generated from AI in the previous year.
Arcuri’s elevated price target also incorporates industry-wide valuation growth. The recent semiconductor sector rally has driven multiples higher throughout the space, providing justification to increase the target despite trimming some fundamental estimates.
The XPU Opportunity Remains in Early Stages
Broadcom’s XPU chips — customized silicon engineered for AI inference applications — continue to scale up. The company maintains partnerships with Alphabet, Anthropic, OpenAI, and Meta Platforms, with each solution tailored to the partner’s unique requirements.
Inference operations, where AI models are deployed for practical applications rather than initial training, are projected to expand as AI implementation broadens. This represents a favorable trend that hasn’t completely materialized in financial results yet.
Broadcom’s aggregate revenue in 2025 totaled $63.9 billion. If the $100 billion AI revenue objective becomes reality, it would effectively double the company’s scale.
Wall Street consensus projects Broadcom’s earnings expanding at 41% annually throughout the next three to five years.
AVGO’s price-to-earnings multiple has increased from below 60 to above 80 during the current rally, placing the PEG ratio around 2 — not inexpensive, but analysts contend the growth trajectory supports it.
Broadcom’s Strong Buy consensus reflects 26 Buy ratings and four Holds issued within the past three months. The mean analyst price target stands at $477.81.
