TLDR
- Broadcom reports Q1 FY2026 earnings on March 4, after market close
- Revenue consensus is $19.1 billion, ~28% year-over-year growth; adjusted EPS forecast at $2.03
- Gross margin decline is the key concern — AI revenue carries lower margins than non-AI
- Wall Street consensus price target is ~$433, with post-December targets averaging ~$458
- UBS reiterates Buy with a $475 target; DA Davidson initiates with a Neutral rating
Broadcom is set to report its Q1 FY2026 earnings on March 4, after the market close.
The stock has had a rough few months. After its December 2025 report, AVGO dropped from over $400 to around $340 in just days, recovered briefly to $355, then fell below $310 by early February. It now trades around $330.
That’s a drop of more than 15% since the last report — despite analysts largely holding their bullish targets.
Wall Street expects Q1 revenue of $19.1 billion, matching Broadcom’s own guidance. That would be 28% growth year-over-year.
Adjusted EPS consensus sits at $2.03, representing roughly 26% growth. Broadcom doesn’t give adjusted EPS guidance directly, but its guidance tends to be conservative.
The company has beaten or met revenue estimates in 22 of its last 24 earnings reports, and adjusted EPS estimates in 23 of those 24. The track record is hard to argue with.
But beating estimates doesn’t guarantee the stock goes up. The market’s reaction will hinge on Q2 guidance, margin commentary, and what management says on the call.
The Gross Margin Question
The big issue hanging over this report is gross margin.
Last quarter, Broadcom posted a gross margin of nearly 78% — among the highest of any large-cap chip stock in the U.S. But the company flagged that Q1 gross margin would fall roughly 100 basis points sequentially, driven by a higher mix of AI revenue.
The issue is straightforward: AI chip sales carry lower gross margins than non-AI sales. As AI grows faster than the rest of the business, the overall margin mix shifts downward.
Investors will be watching for gross margin to come in near 77% or better. Analysts will likely push for clarity on how far margins could fall through the rest of FY2026.
Q2 FY2026 estimates currently sit at $20.35 billion in revenue — roughly 36% year-over-year growth. Adjusted EBITDA margin estimates for Q2 are at 68.5%, based on Broadcom’s own guidance.
Where Analysts Stand
Despite the stock’s slide, Wall Street hasn’t pulled back much on its targets.
The consensus price target sits near $433, implying about 30% upside from current levels. Targets updated after the December report average around $458 — implying roughly 38% upside.
Citigroup recently trimmed its target from $480 to $458, but that’s the only downward revision tracked by MarketBeat since the December report.
UBS reiterated its Buy rating with a $475 target on February 24. The firm noted Broadcom’s semiconductor business trades at 20x P/E, 23x EV/free cash flow, and 17x EV/EBITDA — each about one turn more expensive than Nvidia and peers. UBS also flagged potential VMware customer churn risk in 2026 and 2027 as three-year deals come up for renewal.
DA Davidson initiated coverage with a Neutral rating, citing concerns about Broadcom’s long-term position in the AI ASIC market.
Jefferies reaffirmed a Buy rating, pointing to Broadcom’s position in AI and networking markets.
On the product side, Broadcom recently launched the BroadPeak chip, built on 5nm CMOS technology and targeting advanced 5G and 6G networks. The company claims up to 40% power reduction versus existing solutions.
A German court also ordered Renault to halt sales of its Megane and Clio models following a patent dispute with Broadcom over ethernet network cable connections.
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