SKN | Bank of America Raises Broadcom Price Target Following Strong AI-Driven Growth

Key Points

• Bank of America raised its price target on Broadcom to $530 from $450 while maintaining a Buy rating following the company’s fiscal second-quarter results.
• Broadcom reported revenue of $22.2 billion, up 48% year over year, while GAAP net income surged 88% to $9.3 billion.
• Analysts expect Broadcom’s AI revenue growth to remain exceptionally strong, with projected growth of 180% in fiscal 2026 and nearly 100% in fiscal 2027.

Broadcom Delivers Strong Quarterly Results

Broadcom Inc. (NASDAQ: AVGO) reported strong fiscal second-quarter 2026 results, highlighting continued momentum across its artificial intelligence and infrastructure businesses.

Revenue climbed 48% year over year to $22.2 billion, while GAAP net income increased 88% to $9.3 billion. Adjusted EBITDA reached $15.2 billion, representing 69% of total revenue and demonstrating the company’s ability to maintain significant profitability despite increasing investment in AI-related products and services.

Despite the strong financial performance, Broadcom shares fell 12.59% following the earnings release as investors reacted to margin concerns and elevated expectations surrounding AI growth.

Bank of America Becomes More Bullish

Following the earnings announcement, Bank of America analyst Vivek Arya raised his price target on Broadcom shares to $530 from $450 while maintaining a Buy rating.

The firm noted that although Broadcom’s second-quarter results and third-quarter guidance only modestly exceeded Wall Street expectations, the company’s AI growth trajectory remains among the strongest in the semiconductor sector.

Bank of America expects AI-related revenue growth to reach approximately 180% year over year during fiscal 2026, followed by nearly 100% growth in fiscal 2027.

The firm also increased its earnings-per-share forecasts, projecting EPS of $11.60 for 2026, $17.93 for 2027, and $23.56 for 2028.

AI Infrastructure Continues To Drive Growth

Artificial intelligence remains the primary driver of Broadcom’s growth story.

The company continues to benefit from rising demand for custom AI accelerators, networking solutions, and infrastructure technologies used by hyperscale cloud providers and large enterprise customers.

Bank of America believes Broadcom is well positioned to capitalize on long-term AI infrastructure spending, with analysts forecasting earnings per share could exceed $30 by calendar year 2030. This would represent an estimated compound annual EPS growth rate of roughly 40% between 2025 and 2030.

The bank’s valuation is based on a 30-times multiple of its calendar-year 2027 earnings estimate, reflecting confidence in Broadcom’s long-term AI opportunity.

Margin Pressure Remains A Watch Point

While growth remains strong, investors are closely monitoring profitability trends.

During the earnings call, CEO Hock Tan explained that gross margins are expected to decline to approximately 74% during the third quarter due to a changing revenue mix, as AI-related semiconductor revenue becomes a larger portion of overall sales.

Management emphasized that the decline does not reflect a structural deterioration in semiconductor profitability but rather the impact of product mix between semiconductor and infrastructure software businesses.

Bank of America expects gross margins could trend toward the 72% to 73% range in future periods, making margin performance an important metric for investors to monitor.

Outlook

Broadcom continues to demonstrate strong execution as demand for AI infrastructure accelerates across the technology sector.

The combination of robust revenue growth, expanding AI opportunities, rising earnings forecasts, and continued support from major Wall Street firms reinforces Broadcom’s position as one of the leading beneficiaries of the AI investment cycle.

Although near-term margin pressure contributed to post-earnings volatility, Bank of America’s higher price target reflects confidence that Broadcom’s long-term earnings power and AI-driven growth potential remain intact.

For a confidential discussion regarding your cross-border banking structure, portfolio positioning, or international wealth management strategy, contact our senior advisory team.