Key Takeaways
- Broadcom’s fiscal Q1 results are due after Wednesday’s closing bell, March 4
- Wall Street forecasts earnings per share of $2.03 with revenues reaching $19.26 billion, compared to $1.60 and $14.92 billion in the prior-year period
- HSBC has significantly increased AI networking projections — now targeting $17B in FY26 and $30B in FY27
- Despite maintaining a Buy stance, HSBC lowered its target price from $535 down to $450 due to AI sector valuation adjustments
- Market participants remain wary following Nvidia’s 5.5% decline after its earnings beat
As Broadcom prepares to unveil its fiscal first-quarter financial results this Wednesday, Wall Street expectations run high, yet investor caution remains palpable.
The semiconductor and enterprise software giant is projected to deliver adjusted earnings of $2.03 per share alongside revenues of $19.26 billion. These figures represent notable increases from the year-ago quarter’s $1.60 per share and $14.92 billion — demonstrating impressive year-over-year expansion.
The semiconductor solutions division is projected to drive substantial growth, with anticipated revenues of $12.4 billion — marking a 51% surge compared to last year’s corresponding period. Meanwhile, the infrastructure software segment is forecast to contribute $6.99 billion, reflecting approximately 4.3% growth.
Broadcom’s AI networking operations have emerged as a crucial growth engine. The company has previously revealed a $20 billion backlog in AI networking orders, though HSBC’s Frank Lee suggests this figure may actually understate future demand.
Lee has updated his fiscal year 2026 and 2027 AI networking revenue projections to $17 billion and $30 billion, respectively — representing 43% and 64% premiums over current Street consensus. This substantial divergence highlights the disconnect between mainstream analyst views and HSBC’s more aggressive outlook.
Yet despite this bullish revenue stance, HSBC reduced its price objective from $535 down to $450. The rationale centers on an industry-wide “valuation reset” affecting AI-focused enterprises. While Lee maintains his Buy recommendation, the reduced target reflects changing market dynamics for the sector.
Tech Giants Continue Infrastructure Investment
Analyst optimism persists partly because major technology companies maintain aggressive spending plans. Melius Research’s Ben Reitzes highlighted that both Meta and Alphabet have increased their 2026 capital expenditure budgets by approximately 30%. This sustained commitment to AI infrastructure directly benefits suppliers like Broadcom.
“The rationale for spending remains strong,” Reitzes noted, emphasizing that OpenAI and Anthropic have likewise elevated their revenue projections as corporate adoption accelerates.
He assigns AVGO a Buy rating with a $530 target, characterizing the upcoming report as “another outstanding quarter” based on expanding order backlog.
Nvidia’s Post-Earnings Decline Raises Concerns
Not all market observers approach the earnings release with confidence. Nvidia delivered fourth-quarter results on February 25 that surpassed expectations while providing robust forward guidance. Nevertheless, shares declined 5.5% the following trading session.
Broadcom experienced a sympathetic 3.2% pullback on February 26. This dynamic — where strong results still trigger selling pressure — has heightened trader anxiety.
Freedom Capital Markets’ Paul Meeks articulated this unease 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 forward price-to-earnings multiple of 26.9x, exceeding both Nvidia’s 21.3x and AMD’s 25.7x ratios.
UBS analyst Timothy Arcuri observed that recent software sector weakness has contributed to Broadcom’s relative underperformance year-to-date. While the stock has climbed 64% over the trailing twelve months, it has retreated 9% during 2026.
HSBC’s Lee identified positive developments around AI networking expansion as the next significant catalyst beyond earnings, particularly given Broadcom’s rapidly expanding capabilities in that domain.
