Broadcom Earnings Preview - How Will AI Impact The Bottom Line?

Broadcom is set to report earnings after market close Thursday, with the stock trading near its all-time high of $265.43. The Street expects earnings of $1.58/share on $14.92 billion in revenue, while the whisper number is $1.65/share, and future growth is expected to come from strong demand for A.I. Technically, the stock is acting strong and the number of high ranked funds that own the stock grew from 5534 in the quarter ending in June 2024 to 6552 in the quarter ending March 2025, which is a sign of institutional accumulation.

Analysis

Broadcom (AVGO) is poised to report earnings after Thursday's market close, with its stock currently trading near a recently achieved record high of $265.43, reflecting significant investor optimism. The Street anticipates earnings of $1.58 per share on $14.92 billion in revenue, while the unofficial "whisper number" suggests a potentially higher $1.65 per share. Broadcom has demonstrated robust fundamental growth, with earnings per share increasing from $2.22 in 2020 to $4.87 in 2024, and forecasts project further substantial growth to $6.62 in 2025 and $7.82 in 2026, largely attributed to strong demand in the Artificial Intelligence sector. Technically, the stock exhibits strength, trading above its key 50-day and 200-day moving averages. This positive technical picture is further supported by a notable increase in institutional ownership, with the number of high-ranked funds holding the stock growing from 5534 in the quarter ending June 2024 to 6552 in the quarter ending March 2025, indicating strong institutional accumulation. The overall sentiment surrounding the company is strongly positive (0.8 sentiment score) with a bullish tone, and specific sentiment for AVGO is even higher at 0.85. However, investors should note the stock's historical tendency for significant price volatility following earnings announcements, which can lead to substantial gaps up or down depending on the results.

Key Decisions for Investors

• Investors should closely scrutinize Broadcom's upcoming earnings report, particularly comparing results against the $1.65 per share whisper number, as meeting or exceeding this higher expectation may be crucial for sustained stock appreciation given its recent peak valuation.
• Considering the stock's historical pattern of significant post-earnings price swings, market participants should be prepared for potential volatility and may consider employing risk management strategies or awaiting market settlement before adjusting positions.
• Focus on management's forward guidance and commentary on Artificial Intelligence demand, as sustained growth in this segment is integral to realizing the projected earnings increases for 2025 and 2026, which are key drivers of the current positive institutional outlook.