Broadcom Shares Fall as Analysts Split Over AI Growth

Broadcom shares declined about 3% on Thursday after the chipmaker reported fiscal third-quarter results and raised its multi-year outlook for AI semiconductor revenue.

For the quarter, Broadcom posted revenue of $29.6 billion, up 86% from a year earlier and slightly above the Street estimate of $29.4 billion. Adjusted earnings were $3.32 per share versus consensus of $3.24. Revenue from AI semiconductors more than tripled to $16.7 billion.

For fiscal fourth quarter the company forecast revenue of $34.8 billion, a touch below analysts’ expectations of $34.85 billion. Broadcom also outlined steeper multi-year AI targets: about $58 billion in AI semiconductor revenue for fiscal 2026, roughly $115 billion for fiscal 2027 and an introduced fiscal 2028 outlook of $230 billion.

Broadcom said those longer-term targets are driven by demand from its major XPU customers and partnerships with large AI companies.

Wall Street responses were mixed. Evercore ISI trimmed its price target to $578 from $582 while keeping an Outperform rating. TD Cowen cut its target to $475 from $500 and maintained a Buy rating. Morgan Stanley nudged its target to $505 from $502 and kept an Overweight rating. Cantor Fitzgerald raised its target to $600 from $525 and stayed Overweight. BMO Capital lifted its target to $575 from $455 and reiterated an Outperform. Macquarie upgraded Broadcom to Outperform with a $490 target and projected large purchases from one customer that could exceed $40 billion in fiscal 2028.

Not all analysts were bullish. RBC Capital held a Sector Perform rating with a $400 target, saying Broadcom’s fiscal 2027 AI revenue outlook was close to its view but below consensus. RBC also flagged potential constraints from component supply and infrastructure readiness and noted that large language model companies have supply and financing relationships with multiple chipmakers and cloud providers, which could complicate silicon allocation. RBC estimated Broadcom trades at about 18.5 times calendar 2027 earnings, a premium of more than 30% to a comparable peer on a stock-compensation-adjusted basis.

Customers named in Broadcom’s disclosures include Anthropic, which has a deal for multiple gigawatts of next-generation TPU capacity beginning in 2027, and OpenAI, which is reported to be working with Broadcom on roughly 10 gigawatts of custom AI accelerators through 2029.

Investors reacted to a mix of strong current-quarter results and near-term caution. The slight shortfall to consensus for the coming quarter, analysts’ divergent price-target moves, and concerns about valuation and supply combined in market trading to push the stock lower despite the surge in AI-related sales.