Key Highlights

  • AVGO shares rose approximately 7% in pre-market hours following the company’s forecast of AI chip sales exceeding $100 billion by 2027.
  • First quarter fiscal 2026 revenue reached $19.3 billion, representing a 29% year-over-year increase and surpassing analyst expectations.
  • The AI semiconductor division generated $8.4 billion in Q1 revenue, with projections of $10.7 billion for the upcoming quarter.
  • Management issued Q2 revenue guidance of $22 billion, significantly exceeding the Wall Street consensus of $20.56 billion.
  • Truist maintained its Buy recommendation with a $510 price target after reviewing the quarterly performance.

Broadcom shares climbed approximately 7% during Thursday’s pre-market session after the semiconductor company unveiled projections showing AI chip revenue exceeding $100 billion by 2027, positioning itself as a major competitor in the artificial intelligence hardware market.

The company delivered first quarter fiscal 2026 revenue of $19.31 billion, representing a 29% increase compared to the same period last year. This figure surpassed the Wall Street consensus forecast of $19.26 billion, with particularly strong performance in the semiconductor division, which exceeded expectations by 0.9%.

The AI semiconductor business generated $8.4 billion during the quarter, coming in slightly above Truist’s projection of $8.2 billion. The software division represented the only area of underperformance, falling short of consensus estimates by 2.8%.


AVGO Stock Card
Broadcom Inc., AVGO

The company posted earnings per share of $2.05, exceeding the unguided consensus target of $2.03. EBITDA reached $13.13 billion, representing 68% of total revenues — 2.9% above analyst projections and 100 basis points higher than the company’s own forecast.

Operating margin reached 66.4%, coming in 70 basis points above the consensus expectation of 65.7%.

Major AI Infrastructure Contracts Secured

Management announced plans to supply 3 gigawatts of tensor processing units to Anthropic during 2027. The company will also manufacture and ship OpenAI’s inaugural custom AI chip — representing over 1 gigawatt of capacity — during the same timeframe.

These commitments place Broadcom in direct competition with the magnitude of AI chip agreements recently announced by Nvidia and AMD.

The company issued Q2 revenue guidance of $22 billion, approximately 7.3% higher than Street expectations of $20.5 billion. AI chip revenue for the April quarter is forecast at $10.7 billion — 11.5% above Truist’s model projection of $9.6 billion.

Broadcom additionally revealed a new share buyback authorization of up to $10 billion extending through the end of the calendar year.

Wall Street Response

Truist Securities maintained its Buy rating along with a $510 price target following the quarterly report. The broader analyst community maintains a strong buy consensus, with price targets spanning from $335 to $530.

Jefferies analysts acknowledged that AI spending concerns remain in the market, though they noted that “Broadcom made a strong case for their AI revenue to outgrow the market.”

RBC Capital adopted a more conservative position, reducing its price target to $340 from $370 while keeping a Sector Perform rating, expressing caution regarding AI demand sustainability.

UBS maintained its Buy recommendation, highlighting attractive valuation metrics in the semiconductor segment.

Despite the pre-market rally, AVGO shares remain down approximately 8.3% year-to-date. Nvidia has declined roughly 2% during the same timeframe.

The company recently commenced shipments of what it describes as the industry’s inaugural 2nm custom compute chip built on its 3.5D platform. Broadcom also introduced the BroadPeak chip, designed for next-generation 5G and 6G networks, offering up to 40% power efficiency improvements.

Inventory levels increased by approximately 9 days on a sequential basis to around 60 days, exceeding the typical seasonal decrease of about 1 day — a metric analysts are expected to monitor closely in subsequent quarters.