Broadcom Inc (NASDAQ:AVGO) is set to report fiscal first-quarter results after Wednesday's close. Wall Street is expecting strong numbers even as the stock struggles to regain momentum.
Broadcom Stock Lags Despite AI Boom
Broadcom shares have fallen by more than 8% year to date, significantly underperforming the Nasdaq Composite.
The drop reflects a broader investor rotation away from mega-cap technology companies amid concerns about the sustainability of massive spending on artificial intelligence infrastructure.
Despite the recent decline, analysts expect strong financial results.
Wall Street forecasts fiscal first-quarter adjusted earnings per share of about $2.02, up from $1.60 year-over-year, and revenue of roughly $19.2 billion, up from $14.92 billion in the prior year period, according to Benzinga Pro data.
JPMorgan Sees AI Driving Strong Results
JPMorgan expects the company to deliver strong performance driven by continued AI momentum.
Analyst Harlan Sur, who maintained an Overweight rating and $475 price forecast, said Broadcom is likely to report a "solid" earnings beat and raise.
Sur expects AI revenue to exceed $9 billion, well above the $8.1 billion consensus estimate, supported by strong demand for Alphabet Inc (NASDAQ:GOOGL) Google's TPU 3nm (Ironwood) ASIC chips and networking products, including Tomahawk 5 and the early ramp of Tomahawk 6 switching chips.
The analyst also believes Broadcom could guide April-quarter revenue to $21 billion–$22 billion, ahead of the $20.5 billion consensus forecast, reflecting sustained AI demand.
Sur added that AI revenue could reach $10 billion–$11 billion in the April quarter, significantly above the $8.96 billion consensus estimate.
Looking further ahead, he said Broadcom could generate more than $65 billion in AI revenue in fiscal 2026 and surpass $120 billion in fiscal 2027 as new products and programs ramp.
Sur also noted that demand for Google TPU chips may exceed Broadcom's current supply capacity, suggesting the company is working to increase production to meet rising demand.
Analysts Say Sentiment May Still Weigh On Shares
Despite expectations for strong earnings, some analysts caution that the stock may struggle to rally if market sentiment remains cautious.
Paul Meeks, head of tech research at Freedom Capital Markets, told Bloomberg that market sentiment could still weigh on the shares.
Meanwhile, Shaon Baqui, senior technology research analyst at Janus Henderson, told Bloomberg that the company should emphasize its experience designing large custom AI chips.
AVGO Price Action: Broadcom shares were up 2.52% at $321.74 at the time of publication on Monday, according to Benzinga Pro data.
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