Key Takeaways
- Timothy Arcuri of UBS increased his price target for AVGO from $475 to $490, suggesting approximately 17% potential upside.
- The company’s fiscal second-quarter earnings report is scheduled for June 3.
- Revenue projections tied to Anthropic were reduced following Broadcom’s transition from full-rack systems to standardized ASIC configurations.
- UBS maintains optimism that Broadcom will surpass consensus revenue expectations of approximately $22 billion.
- Analyst sentiment remains overwhelmingly positive with 26 Buy ratings and four Hold ratings issued in the last three months.
Ahead of Broadcom’s (AVGO) fiscal second-quarter financial results due June 3, UBS has upgraded its price objective to $490 from the previous $475. Five-star analyst Timothy Arcuri maintains his optimistic outlook, identifying approximately 17% upside potential from present trading levels, even after moderating certain revenue projections.
Shares of AVGO have climbed 23% since the beginning of the year, currently trading near $410, recovering from a challenging start to 2026 that witnessed a roughly 15% decline through March.
The semiconductor giant has experienced strong momentum since April, though Arcuri’s recent analysis reveals important underlying adjustments to his thesis.
The revision centers on Broadcom’s approach to fulfilling chip orders for Anthropic. The semiconductor manufacturer transitioned away from complete rack-based AI systems toward a more conventional ASIC design. While this might appear to be a setback, the revised configuration actually delivers superior profit margins.
However, this strategic pivot has moderated the initial growth trajectory. Arcuri reduced his Anthropic revenue projection for 2026 to approximately $8 billion, a significant decrease from his earlier $21 billion forecast. His 2027 estimate saw a modest reduction to $22 billion from $23 billion.
Additionally, he adjusted his overall fiscal 2027 AI revenue outlook for AVGO downward to $133 billion from $145 billion, while slightly lowering his 2027 earnings-per-share projection to $21.14.
Reasons Behind UBS’s Continued Optimism
Despite these adjustments, Arcuri maintains his positive stance. He anticipates Broadcom will deliver Q2 revenue guidance exceeding the Street’s consensus estimate of approximately $22 billion.
He forecasts AI-related revenue reaching $13.6 billion in Q3 alone — a figure that would position Broadcom favorably for an impressive full-year performance.
Chief Executive Hock Tan has identified $100 billion in AI revenue as a realistic 2027 objective. This would mark a fivefold expansion from the $20 billion Broadcom generated from AI solutions in the previous year.
Arcuri’s elevated price target also accounts for broader valuation expansion within the semiconductor sector. The recent industry-wide rally has elevated trading multiples across chipmakers, providing justification for the increased target despite moderating certain fundamental estimates.
The XPU Opportunity Remains in Early Stages
Broadcom’s XPU processors — customized silicon engineered for AI inference applications — continue their deployment phase. The company maintains partnerships with Alphabet, Anthropic, OpenAI, and Meta Platforms, with each solution tailored to individual client requirements.
Inference operations, where AI models execute practical tasks rather than undergo training, are projected to expand as AI technology achieves broader adoption. This represents a growth catalyst that hasn’t fully materialized in current financial results.
Broadcom generated total revenue of $63.9 billion in 2025. Should the $100 billion AI revenue objective come to fruition, it would effectively double the company’s scale.
Consensus estimates project Broadcom’s earnings expanding at a 41% compound annual rate over the next three to five years.
AVGO’s price-to-earnings multiple has expanded from below 60 to above 80 during the recent rally, placing the PEG ratio around 2 — while not cheap, analysts contend the growth trajectory supports current valuations.
Broadcom maintains a Strong Buy consensus rating founded on 26 Buy recommendations and four Hold ratings issued over the past three months. The mean analyst price target stands at $477.81.
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