Broadcom (AVGO) has been one of the most rewarding AI stocks in recent months, but its latest earnings report left investors wanting more.The semiconductor and software giant dished out another superb quarterly showing in Q2, extending its impressive streak of posting beats across both lines.Sales jumped sharply year-over-year, while profits continued to grow on the back of surging demand for AI infrastructure. Despite the strong quarterly results, investors were left disappointed, particularly those expecting the kind of upside many analysts had forecast.Additionally, its long-term AI outlook essentially reiterated previous forecasts, instead of introducing a new catalyst. Nevertheless, according to TheFly, five-star Jefferies analyst Blayne Curtis argues that Broadcom’s growth story remains intact, raising his price target and urging investors to remain patient despite near-term challenges.
A leading Wall Street analyst grew more optimistic on Broadcom despite mixed earnings resultsNurPhoto / Getty Images
Wall Street price targets for Broadcom stockBNP Paribas raised Broadcom’s price target to $640 from $600. JPMorgan raised Broadcom’s price target to $580 from $500.KeyBanc raised Broadcom’s price target to $575 from $500. Bernstein raised Broadcom’s price target to $550 from $525. Mizuho raised Broadcom’s price target to $530 from $480. Goldman Sachs raised Broadcom’s price target to $525 from $500.
Source: MarketScreener.
Broadcom’s AI chip roleBroadcom’s AI chip business is centered around custom work for hyperscalers.More AI:Micron sits at the center of a red-hot chip rallyIBM CEO sends blunt message on AI and quantum computingAnthropic CEO makes shocking admission about AIThink of it as being a master tailor in the AI chip space, helping tech giants custom silicon that meets their workloads.Its role has become critical because the biggest names in the AI space, including Google, Meta, OpenAI, and Anthropic are looking for quicker and cost-efficient chips for their own systems. On the flipside, Broadcom’s competitive edge is its experience in custom ASICs, networking, packaging, designed to efficiently move data quickly inside AI data centers. Jefferies sees AI growth outweighing near-term pressureAnalyst Blayne Curtis stuck with a Buy rating on Broadcom stock, bumping his outlook following earnings, laying out the case that its AI opportunity remains the strongest in the chip space. He raised his price target on Broadcom stock to $550 from $500, implying meaningful upside from its current share price of around $479. That comes as a surprise, especially as the company’s near-term guidance failed to impress, falling comfortably short of investor expectations. For color, Curtis is one of Wall Street’s top-ranked chip stock analysts. According to TipRanks, the five-star analyst has a 70% success rate on his ratings, generating an average return of 41% per recommendation.Broadcom’s July-quarter guidance came in strong in terms of sales though, with its management calling for $29.4 billion, while its AI chip revenue forecast of $16 billion came in behind the higher bar some analysts were expecting. However, looking ahead, its management reiterated its fiscal 2027 AI sales opportunity at more than $100 billion, instead of raising their forecast which investors were hoping for.On top of that, Jefferies pointed to a potential profitability headwind. Gross margin guidance came in below market expectations as Broadcom shifts its focus towards custom AI chips.Though these chips continue driving superb growth, they come with lower margins compared to the company’s other offerings. A big part of that is linked to hyperscalers co-designing ASICs at massive scale, offering customers even more pricing power.Nevertheless, Blayne notes that operating margins may improve as AI revenue becomes a bigger part of Broadcom’s overall business.That view is linked to the higher-than-expected spending ramps from major customers, including the likes of Meta Platforms and OpenAI, forecast to increase demand for Broadcom’s custom AI solutions next year.Zooming out, the broader financial picture remains constructive. Broadcom generated $68.3 billion in sales over the past 12 months (25% growth), while maintaining a gross profit margin of 77%. For perspective, its 5-year average gross margin is at 75% according to Seeking Alpha.Broadcom earnings history shows steady beatsBroadcom has posted four consecutive quarters of EPS and revenue beats, with sales growth rising sharply year over year.Q2 2026: EPS of $2.44 beat by $0.04; revenue of $22.19 billion beat by $115.08 million, with YoY growth of 47.87%.Q1 2026: EPS of $2.05 beat by $0.03; revenue of $19.31 billion beat by $171.52 million, with YoY growth of 29.47%.Q4 2025: EPS of $1.95 beat by $0.08; revenue of $18.02 billion beat by $55.89 million, with YoY growth of 28.18%.Q3 2025: EPS of $1.69 beat by $0.03; revenue of $15.95 billion beat by $129.31 million, with YoY growth of 22.03%.
Source: Seeking Alpha.
Broadcom stock returns vs. the S&P 500Over the past week, Broadcom stock returned 13.60%, compared with 0.45% for the S&P 500.Over the past month, Broadcom stock returned 13.76%, compared with 4.48% for the S&P 500.Over the past six months, Broadcom stock returned 25.91%, compared with 10.28% for the S&P 500.Year to date, Broadcom stock returned 38.47%, compared with 10.35% for the S&P 500.Over the past year, Broadcom stock returned 86.58%, compared with 26.52% for the S&P 500.Over the past three years, Broadcom stock returned 490.18%, compared with 76.39% for the S&P 500.
Source: Seeking Alpha.
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