BofA Lifts Broadcom Target to $530
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- Broadcom reported Q2 FY26 revenue of $22.2 billion, up 48% YoY, and GAAP net income of $9.3 billion, up 88% YoY.
- Broadcom's stock fell 12.59% to $418.91 on June 4 after the earnings release, erasing about $280 billion in market value.
- Bank of America raised its price target for Broadcom to $530 from $450, based on a 30× multiple of its FY27 earnings estimate and keeping a buy rating.
- Broadcom CEO Hock Tan said AI revenue will push Q3 consolidated gross margin down to roughly 74% due to product‑mix, while Q3 revenue is guided at about $29.4 billion and adjusted EBITDA at 68% of revenue.
- Broadcom highlighted extended partnerships with Google, Anthropic, and the London Stock Exchange Group, and launched VMware Cloud Foundation 9.1, underscoring its AI‑focused growth strategy.
- Bank of America analysts projected AI revenue growth of 180% YoY in FY26 and nearly 100% YoY in FY27, and forecast EPS of $30+ by 2030, implying a 40% compound annual growth rate.
- Broadcom faces downside risks including semiconductor‑cycle volatility, high exposure to Apple and Google design‑out risk, competitive pressures, and a $60 billion net‑debt load.
Why it matters: Investors see a higher upside with BofA’s $530 target, driven by Broadcom’s rapid AI revenue expansion, but the margin compression and potential chip‑design diversification by Google and Apple raise risk for shareholders and creditors, especially given the firm’s $60 billion net‑debt burden.
