Broadcom shares surged to an all-time high on Thursday, climbing 4.6% to $436.03 by midday, with an intraday peak of $439.70. The rally pushed the company's market capitalization past $2.1 trillion as investors piled into the AI infrastructure leader ahead of its fiscal second-quarter earnings report scheduled for June 3.
The stock's ascent comes amid a flurry of analyst price target upgrades. Wells Fargo raised its target to $545 from $430, while Wolfe Research increased its target to $500 from $420. Citi maintained Broadcom as its top semiconductor pick for 2026 with a $500 target, citing improved earnings visibility ahead of the upcoming report.
Broadcom has guided for fiscal Q2 revenue of approximately $22 billion, representing a 47% year-over-year increase. The company's adjusted EBITDA margin is expected to be near 68% of revenue. In the fiscal first quarter, Broadcom reported revenue of $19.31 billion, up 29% from the prior year, with non-GAAP earnings of $2.05 per share. AI revenue alone hit $8.4 billion in Q1, more than doubling from the same period last year, with CEO Hock Tan noting that "AI revenue growth is accelerating."
Broadcom's custom AI accelerators and networking hardware are key growth drivers, serving hyperscalers like Google, Meta, and OpenAI. In October, Broadcom and OpenAI announced a partnership to deploy 10 gigawatts of custom AI accelerators, with initial deployment expected in the second half of 2026 and completion by 2029. OpenAI CEO Sam Altman called the deal a "critical step in building the infrastructure needed to unlock AI's potential."
While Nvidia dominates the general-purpose AI accelerator market, Broadcom is carving out a niche with custom chips and networking gear for major cloud players. Citi analyst Atif Malik highlighted Google's long-standing relationship with Broadcom as a competitive advantage that would make "it difficult for the competition to catch up technologically."
Valuation remains a point of debate. The stock currently trades at 79 times earnings, above the U.S. semiconductor group average of 63.4 times. A fair-value model from Simply Wall St prices Broadcom at $480, suggesting the stock may be 13.2% undervalued relative to its previous close of $416.79. However, analysts caution that the high valuation already reflects significant optimism, and any growth or margin shortfall could lead to a sharp pullback.
Potential risks include supply chain constraints at TSMC and component shortages for lasers and printed circuit boards, which could impact AI revenue conversion, according to a Seeking Alpha analysis from May 9.
Wall Street remains overwhelmingly bullish, with 35 of 42 analysts rating Broadcom a "Strong Buy," three at "Moderate Buy," and four at "Hold." The average price target is $469.94, with a high estimate of $630. The company also offers strong cash returns, posting $8.01 billion in free cash flow in Q1, a 65-cent-per-share dividend, and a new $10 billion buyback program through 2026.
All eyes now turn to June 3. A strong earnings beat could reinforce the bull case for AI demand and custom silicon, while a cautious outlook might test investor patience after the stock's record run.
