Key Takeaways
- Broadcom is scheduled to release Q3 FY26 financial results on September 2, with analysts forecasting EPS of $3.22, representing a 90.5% increase year-over-year.
- Benchmark’s Cody Acree maintains a Buy recommendation on AVGO stock with a price target of $545.
- Year-to-date, AVGO shares have climbed only 7% and currently trade at valuation levels below most AI sector peers.
- On August 28, ARK Invest purchased 55,131 shares of AVGO, representing an investment exceeding $20 million.
- Consensus among Wall Street analysts points to a Strong Buy rating on AVGO, with a mean price target of $512.36, suggesting 39% potential appreciation.
The semiconductor giant Broadcom is approaching its fiscal third-quarter FY26 earnings announcement scheduled for September 2, with market analysts expressing elevated optimism ahead of the disclosure.
Shares of AVGO are currently changing hands at $368.62, reflecting a modest 7% gain year-to-date following a challenging period that included a 13% decline after the company’s Q2 FY26 earnings release. While those quarterly results demonstrated solid fundamentals, they fell short of the heightened artificial intelligence growth expectations that institutional investors had anticipated.
Ahead of the upcoming earnings event, Benchmark analyst Cody Acree has reaffirmed his Buy stance on AVGO while maintaining his $545 price objective. According to Acree, the recent share price weakness has established a more attractive valuation for prospective investors.
Among over 12,499 analysts tracked on TipRanks, Acree holds the No. 63 position, boasting a 68% accuracy rate and delivering an average return of 33.40% per recommendation over a one-year timeframe.
Earnings Expectations Breakdown
The analyst community is forecasting Q3 FY26 earnings per share of $3.22, marking a substantial 90.5% surge compared to the prior-year period. Revenue projections stand at $29.24 billion, representing an 83.3% year-over-year increase.
Acree’s projections run slightly above consensus. His model anticipates revenue reaching $29.403 billion with EPS hitting $3.24 for the third quarter, both exceeding Street estimates.
Looking toward Q4 FY26 guidance, Acree predicts Broadcom will forecast revenue of $34.902 billion alongside EPS of $3.89. He suggests that market participants will likely place greater emphasis on the fourth-quarter outlook rather than minor variations in Q3 performance.
Regarding AI chip momentum, Acree highlighted management’s expectation of approximately 10 gigawatts in FY27 shipments, with the 2026-27 timeframe already locked in and strategic planning advancing for the 2028-29 period.
Google continues to lead as the highest-volume customer for Broadcom’s custom XPU solutions, though Acree emphasized that Anthropic, OpenAI, and Meta Platforms are anticipated to contribute additional demand. The company is also engaging with two other prospective customers.
Market Competition Analysis
Acree acknowledged certain competitive headwinds on the horizon. MediaTek is positioned to serve as a secondary supplier in select programs, while Marvell has introduced new inference solutions and TPU attachment programs that may challenge AVGO’s market positioning.
Despite these developments, Acree doesn’t perceive either competitor as posing an immediate threat to Broadcom’s flagship high-performance TPU partnerships. He referenced Broadcom’s April partnership extension with Google, which encompasses multiple upcoming TPU generations and AI networking infrastructure extending through 2031, as a critical foundation for sustained growth.
Google’s strategy to broaden its chip supplier base was characterized as presenting a “share-of-growth” challenge rather than endangering AVGO’s established TPU revenue streams.
From an institutional investment perspective, ARK Invest acquired 55,131 shares of AVGO on August 28, representing approximately $20.48 million in value. This transaction followed a comparable purchase earlier that week, occurring alongside ARK’s decision to divest its AMD holdings.
The Street’s Strong Buy consensus rating on AVGO incorporates an average price target of $512.36, indicating approximately 39% upside potential from present trading levels.
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