TLDR
- Citi raised its price target on Broadcom to $500, up from $475, and kept its Buy rating
- Citi’s analyst calls AVGO the “#1 semis pick in 2026” ahead of Q2 earnings on June 3
- AI revenue is projected to grow from ~49% of total sales now to ~81% by fiscal Q4 2028
- Broadcom has six major AI customers including Google, Meta, Anthropic, and OpenAI
- Wall Street holds a Strong Buy consensus with an average price target of $468.79
Citi has raised its price target on Broadcom to $500 per share, up from $475, ahead of the company’s fiscal second-quarter earnings due on June 3.
The bank kept its Buy rating and named AVGO its top semiconductor pick for 2026.
Broadcom stock was trading around $410 on Tuesday, down over 4% on the day.
Analyst Atif Malik, ranked third among Wall Street stock analysts, expects April and July quarter revenue and earnings per share to come in modestly above consensus. He points to continued AI demand as the main driver.
Citi’s new $500 target is based on a 20x multiple applied to its fiscal 2028 EPS estimate of $25. The bank says rolling forward to that year reflects “increased earnings visibility.”
AI Revenue Set for Sharp Growth
Malik projects AI revenue will rise from around 49% of total Broadcom sales today to roughly 81% by fiscal Q4 2028.
He now expects Google and Anthropic combined to contribute around $80 billion in AI-related revenue. Total AI sales are forecast to hit $115 billion in 2027, up from a prior estimate of $100 billion, then climb to $180 billion in 2028.
Broadcom currently counts six major AI customers: Google, Meta, Anthropic, OpenAI, and two undisclosed clients Malik believes include ByteDance. The company is also working with three additional customers on custom AI chip development.
The analyst revised FY26, FY27, and FY28 EPS estimates by -4%, +5%, and +34% respectively. The changes reflect stronger TPU shipment assumptions and a shift in the Anthropic partnership from rack shipments to chip shipments.
Chip revenue carries better gross margins, though it represents only around 20%–25% of the value of rack revenue.
Competitive Risks and Software Business
On the competitive side, Malik says a five-year long-term agreement with Google should ease concerns about Google building its own chip alternatives. He believes it would be hard for rivals to close the gap on the technology front.
Citi also pushed back on concerns about Broadcom’s enterprise software business, calling fears “overblown.”
The software segment is deeply embedded in large organizations, particularly companies with more than 10,000 employees. Malik sees little sign of customers moving to competing platforms.
Enterprise security is only a small piece of revenue today, but Malik says its role is growing as companies focus more on protecting infrastructure in the agentic AI era.
Wall Street is mostly in agreement. Broadcom holds a Strong Buy consensus with 25 Buy ratings and 4 Holds. The average price target sits at $468.79, implying around 12% upside from current levels.
Broadcom reports fiscal Q2 earnings on June 3.
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