By Angela Palumbo
Broadcom earnings could be strong thanks to artificial intelligence demand, but shareholders should be prepared for a muted stock reaction as market sentiment teeters.
Broadcom is scheduled to report fiscal first-quarter financials after the stock market closes on Wednesday. Analysts expect the chip maker to report adjusted earnings of $2.03 a share on revenue of $19.26 billion. That would be a jump from the $1.60 a share on revenue of $14.92 billion Broadcom posted in the same period last year.
Revenue for the company's semiconductor solutions segment is expected to be $12.4 billion, a 51% increase from the prior year. Analysts also estimate infrastructure software revenue of $6.99 billion, up 4.3% from the prior year.
Broadcom makes critical components that help power AI. This has helped boost growth, as clients invest more and more on AI. Melius Research analyst Ben Reitzes wrote in a note on Feb. 23 that he expects the rising investments from large tech companies to build out their AI infrastructure will lead to this being "another outstanding quarter," for Broadcom.
"It's become pretty clear that there is a lot of upside to that backlog since huge customers like Meta and Alphabet are ordering more, having just raised 2026 Capex estimates by 30%," Reitzes said. He rates Broadcom stock as a Buy with a $530 price target.
Shares of Broadcom have jumped 64% over the past 12 months as investors bet the chip company will continue to benefit from AI demand. However, the stock has fallen 9% this year. The company also offers enterprise software services, and UBS analyst Timothy Arcuri wrote on Feb. 23 that he thinks the recent selloff in software has "been a factor in AVGO's lagging stock performance."
Broadcom shares also dropped 3.2% on Feb. 26 after fellow chip maker Nvidia reported earnings on Feb. 25. The AI darling reported fourth-quarter financials that handily beat analyst estimates, and gave a stronger-than-expected financial guidance. Still, Nvidia stock dropped 5.5% on Feb. 26.
"I'm a bit anxious about the reaction to AVGO's quarterly report & guidance on Mar 4, particularly given the reactions last week to the announcements from other AI bellwethers," Paul Meeks, head of Technology Research at Freedom Capital Markets, wrote on Tuesday.
Broadcom is also more expensive than its peers. The stock is trading at 26.9 times earnings expected over the next 12-months, compared with Nvidia, which is trading at 21.3 times forward earnings, and AMD, which is trading at 25.7 times forward earnings.
Investors are nervous. Tech stocks have had a massive run leading up to 2026 as Wall Street bets on who well benefit from the future of AI. But now, the geopolitical environment is uncertain, and questions remain about whether or not companies will start to pull back their AI spending.
Reitzes is confident that massive AI spending isn't going away anytime soon, which is a positive for Broadcom.
"The rationale for spending remains strong as Google and Meta Platforms are seeing AI-driven revenues accelerate, while OpenAI and Anthropic have raised revenue forecasts materially as enterprise demand scales," he said.
Write to Angela Palumbo at angela.palumbo@dowjones.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
March 04, 2026 01:30 ET (06:30 GMT)
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