Key Takeaways
- Citi has elevated its Broadcom price target to $500 from $475 while maintaining a Buy recommendation
- The firm designates AVGO as its premier semiconductor selection for 2026 before Q2 results release on June 3
- Artificial intelligence revenue is expected to surge from approximately 49% of overall revenue to roughly 81% by fiscal Q4 2028
- The company serves six prominent AI clients, including Google, Meta, Anthropic, and OpenAI
- Analysts maintain a Strong Buy consensus rating with an average target of $468.79
Citigroup has increased its price objective for Broadcom to $500 per share from its previous $475 forecast, positioning ahead of the chipmaker’s fiscal second-quarter financial results scheduled for June 3.
The financial institution maintained its Buy recommendation while designating AVGO as its premier semiconductor investment opportunity for 2026.
Shares of Broadcom were changing hands near $410 on Tuesday, experiencing a decline exceeding 4% during the trading session.
Atif Malik, an analyst ranked third among Wall Street equity researchers, anticipates April and July quarter revenue and earnings per share will moderately exceed market expectations. He identifies sustained AI demand as the primary catalyst.
Citi’s revised $500 target reflects a 20x earnings multiple applied to its fiscal 2028 EPS projection of $25. The firm states that extending projections to that timeframe demonstrates “enhanced earnings clarity.”
Artificial Intelligence Revenue Poised for Substantial Expansion
Malik forecasts AI-related revenue will expand from approximately 49% of Broadcom’s total sales currently to about 81% by the fourth quarter of fiscal 2028.
He now anticipates Google and Anthropic together will generate approximately $80 billion in AI-focused revenue. Overall AI sales are projected to reach $115 billion during 2027, an increase from the previous $100 billion estimate, before climbing to $180 billion in 2028.
Broadcom presently serves six major artificial intelligence customers: Google, Meta, Anthropic, OpenAI, and two unnamed clients that Malik suspects include ByteDance. The semiconductor manufacturer is additionally collaborating with three other customers on bespoke AI chip development.
The analyst adjusted FY26, FY27, and FY28 EPS projections by -4%, +5%, and +34% respectively. These modifications account for enhanced TPU shipment assumptions and a transition in the Anthropic relationship from rack-based shipments to chip-focused shipments.
Chip revenue generates superior gross margins, although it constitutes only approximately 20%–25% of the value compared to rack revenue.
Competition Concerns and Software Division Performance
Regarding competitive dynamics, Malik indicates a five-year extended agreement with Google should mitigate worries about Google developing proprietary chip alternatives. He maintains that competitors would face significant challenges in narrowing the technological advantage.
Citi also dismissed concerns surrounding Broadcom’s enterprise software operations, characterizing such worries as “exaggerated.”
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 a modest revenue portion, but Malik notes its expanding significance as corporations prioritize infrastructure protection in the agentic AI landscape.
Wall Street analysts broadly concur with this outlook. Broadcom maintains a Strong Buy consensus rating with 25 Buy recommendations and 4 Hold ratings. The mean price target stands at $468.79, suggesting approximately 12% appreciation potential from present levels.
Broadcom will release its fiscal Q2 earnings results on June 3.
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