Stock price surges nearly 5%! Wall Street optimistic about Broadcom: AI revenue outlook exceeds expectations!

The company announced that it has secured the supply of key components until 2028. Due to economies of scale and yield improvement, rack-level shipment increases are no longer expected to dilute profit margins in the coming quarters. Wall Street believes that Broadcom’s better-than-expected guidance and the company’s latest comments on gross margin, supply chain, and new customers are guiding the market to revalue the company. Goldman Sachs raised its 12-month price target from $450 to $480 and added it to the Conviction List.

Goldman Sachs believes that Broadcom’sbetter-than-expected performance guidance, the company’s comments on gross margin improvement, locked-in key production components, and new custom chip customers are guiding the market to revalue the company.

On March 4, Goldman Sachs analysts including James Schneider Ph.D. stated in a report that thecompany’s FY27 AI semiconductor revenue outlook significantly exceeds $100 billion, together with raised quarterly guidance, giving share prices strong upward momentum.

Broadcom’s management stated that the companyhas secured key supplies (memory, lasers, packaging) necessary to support revenue estimates through FY28, and due to economies of scale and yield advantages, further increases in rack-level shipments are no longer expected to dilute profit margins in the next quarters.

Based on this, Goldman Sachs maintains its Buy rating and keeps Broadcom on its Conviction List, raising the 12-month price target from $450 to $480. At the same time, it substantially raised AI semiconductor revenue forecasts for FY26/27/28 to $60 billion/$130 billion/$171 billion. This quarter’s results largely met market expectations, but the 2Q outlook is notably above consensus. The company expects Q2 revenue of $22 billion, with AI semiconductors reaching $10.7 billion. Goldman notes this reflectsaccelerated demand and improved order backlog visibility. Management has set more ambitious mid-term goals, claiming that with up to 10GW data center deployments,FY27 AI semiconductor revenue can significantly exceed $100 billion and expects continued growth in FY28. Goldman Sachs calls this an “upward shift in the expectations anchor.” Based on these assumptions, Goldman revised up its AI semiconductor revenue forecasts for FY26, FY27, and FY28 to approximately$60 billion, $130 billion, $170 billion, emphasizing this is a substantial upwards adjustment to investor models.

Goldman Sachs says thatBroadcom has secured ahead of time the supply of key components such as memory, lasers, and packaging, sufficient to support revenue expectations through FY28, thereby alleviating downward pressure on gross margins. The company also retracted earlier hints that “rack-level system shipments would dilute profits,”believing that larger scale and yield improvement can absorb the impact. Goldman expects this will help Broadcom maintain its current AI product profit structure in the mid-term. Goldman thus “rewrote" the earnings path, raising normalized EPS estimates from $12 to $16, and using a 30x P/E arrived at a$480 price target, also noting that Broadcom’s cost-down pace in AI networking and custom silicon can keep up with Nvidia. At the product level, Goldman is optimistic aboutthe continued ramp-up of Ethernet and switch chips,with Tomahawk 6 leading and Tomahawk 7 expected to ramp strongly. The firm expects network revenue to make up 40% of AI semiconductors in Q2, and maintain 33%-40% in later periods. Risks noted include potential slowdowns in AI infrastructure spending, loss of custom computing market share, slower digestion of inventories in non-AI business, and increased competition in the VMware domain.

Benchmark reiteratesits Buy rating on Broadcomwith a $485.00 price target, citing the company’s stronger-than-expected Q2 outlook and long-term AI revenue projections. This semiconductor giant has a market cap of $1.55 trillion, and as of the first quarter of FY2026, its revenue has grown an impressive 25% over the past twelve months.

Analyst Cody Acree pointed out that after Q1 FY2026 results basically met expectations, Broadcom's share price rose about 5% in after-hours trading. The stock has delivered a 67% return over the past year, though InvestingProanalysis indicates that the stock is currently trading above its estimated fair value. This positive market reaction contrasts with Nvidia’s recent lukewarm post-earnings response, despite the latter’s stronger-than-expected performance.

Broadcom forecasts its AI revenue will grow well beyond $100 billion next year. The company also noted that supply commitments have been secured through calendar year 2028.

Management highlighted that, as its six core platform customer groups continue to expand, these customers are increasing their training and inference capacities, improving the company’s multi-year visibility. The company noted that demand is increasingly concentrated among these hyperscale partners. Broadcom maintains an impressive 77% gross margin, reflecting its strong pricing power as a major player in the semiconductor industry.

Broadcom has made it clear that the revenue path for AI chips will continue to accelerate in 2026, 2027, 2028, and beyond. The core concern in the market remains whether capital expenditures by hyperscale players and large language models can continue without any near-term pause in investment returns.

In other recent developments, Broadcom attracted attention following a series of analyst updates and financial guidance announcements. The company posted first-quarter results for FY2026 in line with expectations and provided Q2 revenue guidance exceeding consensus estimates by 10%.

Analysts have responded positively to Broadcom’s AI revenue projections. Wolfe Research highlights that FY2027 AI revenue guidance has been raised to exceed $100 billion, surpassing the previous market consensus of about $85 billion. Cantor Fitzgerald reiterated its Overweight rating and $525 price target, noting the company's FY2027 AI revenue outlook. Rosenblatt and Baird both raised their price targets, with Rosenblatt setting a new target of $500 and Baird lifting its target to $630, citing strong AI customer growth. RBC Capital also raised its price target to $360, maintained a Sector Perform rating, and pointed to Broadcom's strong Q2 FY2026 outlook. These updates reflect that the robust AI revenue growth trajectory is boosting analysts’ confidence and price targets.