Broadcom (AVGO) was in focus on Tuesday as HSBC maintained its Buy rating and cut its price target on the software and semiconductor giant ahead of its fiscal first-quarter earnings results tomorrow.
“At its upcoming 1QFY26 results announcement on 4 March, we expect Broadcom to report revenue of $9.5B, slightly above management’s guidance of $19.1B and Visible Alpha consensus of $19.2B,” analyst Frank Lee wrote in a note to clients. “For 2QFY26, we expect revenue of $21B, 3% above consensus of $20.3B. We expect the AI-driven growth momentum to continue but expect a more dramatic growth trajectory to be 2HFY26 weighted.”
Lee lowered his price target on Broadcom to $450 from $535 on the belief there has been a “valuation reset” for artificial intelligence-focused companies.
Going deeper, Lee said the next catalyst for Broadcom (aside from earnings) would be any positive focus on AI networking, given the expansion of the market. Broadcom previously said it had a $20B AI networking backlog.
“However, given Broadcom’s rapid expansion of AI networking portfolio, we believe the revenue is still underestimated as we are revising our FY26/FY27 AI networking revenue estimates to $17B/$30B − 43%/64% above the Street,” Lee added. “Our most bullish scenario analysis for FY26e/FY27e on higher AI networking revenue implies further upside of 16%/17% to EPS vs. our base case.”