Broadcom (AVGO) Gets Citi Price Target Boost Ahead of Q2 Earnings

Citi raised its price target on Broadcom (AVGO) to $276 from $210, maintaining a Buy rating ahead of the company's Q2 fiscal 2026 earnings release on June 5. The upgrade reflects optimism surrounding Broadcom's AI segment, which is expected to contribute 30% of overall sales in fiscal 2025, with the analyst noting potential upside from a recovery in the non-AI semiconductor business offsetting gross margin dilution from AI investments. Wall Street anticipates Q2 EPS of $1.57, a 43% year-over-year increase, and revenue growth of 20% to $14.96 billion.

Analysis

Citigroup has upgraded its price target for Broadcom (AVGO) to $276 from $210, reiterating a Buy rating ahead of its second-quarter fiscal 2026 earnings announcement scheduled for June 5. This revision, implying an approximate 11% upside from current valuation, is primarily attributed to sustained strength within Broadcom's artificial intelligence (AI) operations. Citi anticipates AI-related revenue will constitute 30% of the company's total sales in fiscal 2025. Market consensus projects Broadcom will report a significant 43% year-over-year increase in second-quarter earnings per share to $1.57, with revenue expected to climb 20% to $14.96 billion. Notably, while Broadcom's non-AI semiconductor business currently operates 40% below its peak, Citi analyst Christopher Danely suggests a potential recovery in this segment could counterbalance the gross margin dilution arising from intensive AI investments. Broadcom's stock has appreciated over 87% in the past year, propelled by robust demand for its application-specific integrated circuits (ASICs) tailored for AI applications. Despite prevailing macroeconomic uncertainties and concerns regarding tariffs, overall analyst sentiment towards Broadcom's future performance remains optimistic.

Key Decisions for Investors

• Investors should consider the positive momentum driven by Broadcom's AI segment and the recent Citi price target increase, which suggests further potential upside ahead of the June 5 earnings release.
• Closely monitor the upcoming Q2 fiscal 2026 earnings for confirmation of the projected 43% EPS growth and 20% revenue increase, paying particular attention to the performance and outlook of the AI division.
• Evaluate the non-AI semiconductor segment's recovery trajectory, as improvements here could mitigate margin pressures from AI investments and provide an additional growth lever.