TLDR
- Broadcom reports fiscal Q1 earnings after market close on Wednesday, March 4
- Analysts expect EPS of $2.03 and revenue of $19.26 billion, up from $1.60 and $14.92 billion a year ago
- AI networking revenue estimates have been revised sharply higher — HSBC now forecasts $17B for FY26 and $30B for FY27
- HSBC kept its Buy rating but cut its price target from $535 to $450, citing an AI valuation reset
- Investor sentiment is cautious after Nvidia dropped 5.5% post-earnings despite beating estimates
Broadcom is heading into its fiscal first-quarter earnings report on Wednesday with strong analyst expectations, but investors are keeping one eye on the exit.
The chip and software company is expected to post adjusted earnings of $2.03 per share on revenue of $19.26 billion. That compares to $1.60 per share and $14.92 billion in the same quarter last year — solid year-over-year growth by any measure.
The semiconductor solutions segment is doing the heavy lifting, with revenue estimates of $12.4 billion — a 51% jump from the prior year. Infrastructure software is expected to bring in $6.99 billion, up about 4.3%.
Broadcom’s AI networking business has become a key growth driver. The company previously disclosed a $20 billion AI networking backlog, and HSBC analyst Frank Lee believes even that figure underestimates what’s coming.
Lee revised his FY26 and FY27 AI networking revenue estimates to $17 billion and $30 billion respectively — 43% and 64% above Wall Street’s current consensus. That’s a wide gap between what most analysts expect and what HSBC sees as the likely reality.
Despite that optimism, HSBC cut its price target from $535 to $450. The reason? A broader “valuation reset” for AI-focused companies. Lee kept his Buy rating intact, but the target cut signals that the market has repriced the sector.
The AI Spending Backdrop
One reason analysts remain bullish is that the biggest tech spenders aren’t slowing down. Melius Research analyst Ben Reitzes pointed to Meta and Alphabet both raising their 2026 capital expenditure estimates by around 30%. That kind of commitment to AI infrastructure spending flows directly to companies like Broadcom.
“The rationale for spending remains strong,” Reitzes said, adding that OpenAI and Anthropic have also raised revenue forecasts as enterprise demand grows.
He rates AVGO a Buy with a $530 price target, calling this “another outstanding quarter” based on the rising backlog.
The Nvidia Warning Sign
Not everyone is feeling relaxed ahead of the print. Nvidia reported fourth-quarter results on February 25 that beat estimates and offered stronger-than-expected guidance. The stock still dropped 5.5% the next day.
Broadcom fell 3.2% in sympathy on February 26. That kind of reaction — where a beat-and-raise still results in a sell-off — has put traders on edge.
Paul Meeks of Freedom Capital Markets flagged the concern directly: “I’m a bit anxious about the reaction to AVGO’s quarterly report and guidance on March 4, particularly given the reactions last week to the announcements from other AI bellwethers.”
The valuation picture adds more weight to that caution. Broadcom is currently trading at 26.9 times forward earnings, above both Nvidia at 21.3 times and AMD at 25.7 times.
UBS analyst Timothy Arcuri noted that a recent software sector selloff has contributed to Broadcom’s underperformance this year. The stock has gained 64% over the past 12 months but is down 9% in 2026.
HSBC’s Lee said the next meaningful catalyst beyond earnings would be any positive development around AI networking expansion, given Broadcom’s rapidly growing portfolio in that space.
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