Margin dilution and concerns over near-term revenue could become key near-term challenges for Broadcom , some Wall Street analysts believe. Shares shed 6% in Friday’s premarket session despite the semiconductor manufacturer posting a fiscal fourth-quarter earnings and revenue beat . Broadcom also guided for current-quarter revenue to come in at $19.1 billion, representing 28% year-over-year growth and higher than the $18.3 billion analysts polled by LSEG have penciled in. CEO Hock Tan also said in a statement that Broadcom expects AI chip sales will double this quarter to $8.2 billion from this time last year. However, other comments the CEO made were hurting the stock on Friday morning. One sore spot on Broadcom’s earnings report was its margins. “Amid very crowded investor positioning, AVGO put up solid results and guidance but some of the commentary on backlog and margins was muddled enough to potentially drive a ‘sell the news’ dynamic in the near-term,” UBS analyst Timothy Arcuri wrote. Deutsche Bank’s Ross Seymore echoed this sentiment. “While all of these AI revenue figures (~75% XPU, ~25% Networking) are surging higher, the cost of this growth comes on margins, especially with the rack-scale ramp for Anthropic,” Arcuri said. Meanwhile, Barclays’ Tom O’Malley pointed to a slight delay in Broadcom’s Open AI revenue ramp than investors had previously expected as a slight headwind that “spooked some investors in the aftermarket.” JPMorgan analyst Harlan Sur also added that some investors may have sent the stock down on concerns that AI revenue in 2026 may be weaker than they first expected. “Judging by the after-market stock reaction, it seems many investors have concluded that the $73B of AI backlog called out by mgmt implies AI revenue in the range of $50B for next year (i.e. softer than some were expecting), but we believe this conclusion fails to discern the AI revenue ‘wood from the trees.’ The $73B backlog for the next 18 months is not static,” Sur wrote. Meanwhile, Morgan Stanley analyst Joseph Moore also cited some weaker non-AI revenues as another sticking point. “Non AI semis outlook is stable, while near term [software] is slightly below,” he said. JPMorgan’s Sur agreed with this point, also conceding that revenue growth has been “slower to get off the ground” than he’d expected for non-AI semis. Bottom line, most analysts maintained their long-term bullish stance on Broadcom, citing an acceleration in AI momentum and overlooking the revenue-related noise that resulted from this print. Most analysts also increased their price targets following the earnings beat. Here’s how Wall Street’s biggest shops reacted. Wells Fargo: equal weight rating, $410 price target The bank’s target, up from $345, implies less than 1% upside from Broadcom’s Thursday close. “AVGO delivered another blowout AI-driven qtr; most notably pointing to AI semi rev. at +2x y/y in F1Q26 and FY26 w/ potential accel … We continue to see shares representing a balanced risk/ reward at current levels with significant leverage and an expectation that future acquisitions will remain a use of capital, keeping us on the sidelines.” Deutsche Bank: buy, $430 Deutsche Bank’s forecast, raised from $400, offers upside of 6%. “Overall, AVGO remained extremely confident in its AI revenues across the board, with increased emphasis on the sustainability of its connectivity business despite most of the attention being focused on its XPU business. As such, with the incremental Anthropic revenues, the addition of a fifth XPU customer, and the increasingly impressive AI backlog, we’ve raised our PF EPS estimate by +20%, as we maintain our Buy rating and move our PT to $430 (versus $400 prior).” Goldman Sachs: buy, $450 Goldman Sachs’ target, up from $435, corresponds to upside of around 11%. “We reiterate our Buy rating on Broadcom as our conviction continues to increase that its dominant position in custom silicon is enabling low-cost inference for a number of hyperscalers and model builders — mostly notably Google — in a way that can drive sustained outperformance for Broadcom’s AI business relative to peers … Broadcom expects some level of gross and operating margin percentage dilution is possible as the company ramps full-rack solutions (which have higher pass-through components) ramp beginning in 2H26 with Anthropic, and potentially later with OpenAI. However, the company expects this business to remain strongly accretive in dollar terms, and will attempt to offset some of this dilution via operating leverage and other cost optimization.” Morgan Stanley: overweight, $462 Morgan Stanley’s target, raised from $443, calls for 14% upside going forward. “Strong AI guidance for April somewhat offset by weaker non AI revs, higher rack % in 2h26, and tough comps into 1h27 if the rack orders don’t repeat — but still a strong outcome. Estimates and PT move higher.” UBS: buy, $472 Analyst Timothy Arcuri’s forecast is 16% above Broadcom’s Thursday closing price. “Putting it all together, we still see AI revenue growing significantly in excess of 100% next year and getting close to this level again in 2027 and OpenAI is still on the come and not included in any of AVGO’s backlog numbers.” JPMorgan: overweight, $475 Analyst Harlan Sur’s price target, up from $400, represented upside of 17%. “Even if we conservatively assume zero Anthropic revenue after FY26 (i.e. a “one and done” TPU customer), and no growth for AVGO’s other customers (GOOG, META, ByteDance, and SoftBank/ARM (newly announced customer #5)) this implies FY27 AI revenue in the range of $110-115B at a bare minimum (mgmt also did not push back on the idea that AI revenue could double in FY27). This is the lens through which we believe investors should be viewing the outlook for AI revenue growth over the next couple of years.” Bernstein: outperform, $475 Bernstein hiked its price target to $475 from $400. “If one wanted to nitpick, one could note that non-AI semis (while bottomed) continue to be weak, tax rates are going up, and that AI revenues will be somewhat dilutive to overall gross margins given the component pass throughs (though management has been transparent on this). But we think this all misses the point; as AI spending continues the company continues to be the clear ASIC winner with numbers that should have a strong upward bias (and which are getting into extremely rarified territory).” Barclays: overweight, $500 The firm raised its price target from $450. This updated forecast implies the stock could rise 23% from here. “During the quarter, AVGO added a 5th customer with a $1B order for FY26. OAI revenue ramps in FY27 which is a slight push out from 2H CY26 and likely spooked some investors in the aftermarket. All-in, this was a solid print and adds another leg to the massive AI buildout.” Bank of America: buy, $500 The bank raised its price target from $460. “Beat goes on, estimates go up, ignore expectations noise … Reiterate Buy on our top pick.”
