Key Highlights
- Citi upgraded Broadcom’s price target to $500 from $475 while maintaining its Buy recommendation
- The financial firm designates AVGO as its “#1 semis pick in 2026” before June 3 Q2 results
- Artificial intelligence revenue expected to surge from approximately 49% of total revenue to roughly 81% by fiscal Q4 2028
- The company serves six prominent AI clients, including Google, Meta, Anthropic, and OpenAI
- Analysts maintain Strong Buy consensus rating with average target of $468.79
Citi has increased its valuation target for Broadcom to $500 per share from its previous $475 estimate, positioning ahead of the company’s fiscal second-quarter financial report scheduled for June 3.
The financial institution maintained its Buy recommendation while designating AVGO as its premier semiconductor selection for 2026.
Shares of Broadcom traded near $410 on Tuesday, experiencing a decline exceeding 4% during the session.
Atif Malik, an analyst ranked third among Wall Street equity researchers, anticipates April and July quarter revenue and earnings per share will marginally exceed market expectations. He identifies sustained AI demand as the primary catalyst.
Citi’s refreshed $500 projection applies a 20x valuation multiple to its fiscal 2028 earnings per share forecast of $25. The bank indicates that extending projections to that timeframe demonstrates “increased earnings visibility.”
Artificial Intelligence Revenue Trajectory Points Upward
Malik forecasts AI-related revenue will expand from approximately 49% of Broadcom’s total sales currently to around 81% by the fourth quarter of fiscal 2028.
He currently anticipates Google and Anthropic together will generate roughly $80 billion in AI-driven revenue. Overall AI sales are predicted to reach $115 billion during 2027, an increase from the previous $100 billion projection, before ascending to $180 billion in 2028.
Broadcom presently serves six major AI customers: Google, Meta, Anthropic, OpenAI, plus two unnamed clients that Malik suspects include ByteDance. The semiconductor company is additionally collaborating with three more customers on bespoke AI chip engineering.
The analyst adjusted FY26, FY27, and FY28 earnings per share projections by -4%, +5%, and +34% respectively. These modifications account for enhanced TPU shipment expectations and a transition in the Anthropic collaboration from rack deliveries to chip deliveries.
Chip sales generate superior gross margins, although they constitute only approximately 20%–25% of rack revenue value.
Competition Concerns and Software Division Performance
Regarding competitive landscape, Malik indicates a five-year extended partnership with Google should alleviate worries about Google developing proprietary chip alternatives. He contends that competitors would face significant challenges bridging the technological divide.
Citi also dismissed concerns surrounding Broadcom’s enterprise software operations, characterizing apprehensions as “overblown.”
The software division maintains deep integration within large enterprises, especially organizations exceeding 10,000 employees. Malik observes minimal evidence of clients migrating to alternative platforms.
Enterprise security currently represents only a modest revenue portion, but Malik emphasizes its expanding importance as corporations prioritize infrastructure protection during the agentic AI era.
Wall Street sentiment remains largely positive. Broadcom maintains a Strong Buy consensus rating with 25 Buy recommendations and 4 Hold ratings. The average analyst price target stands at $468.79, suggesting approximately 12% upside potential from present levels.
Broadcom releases fiscal Q2 earnings results on June 3.
