Analysts Hike Broadcom’s Stock Price Targets in Advance of Earnings

Broadcom Inc. (NASDAQ: AVGO) is once again under the spotlight as investors eagerly await its upcoming earnings report, scheduled for release after the closing bell today, June 5, 2025. The semiconductor and infrastructure software giant has a history of exceeding expectations, and the question on everyone’s mind is: can Broadcom continue its trend of earnings beats?

For the upcoming earnings report, analysts are anticipating an EPS of $1.57, representing a 54.02% increase year-over-year. Revenue estimates stand at $14.97 billion, a 19.92% increase compared to the same period last year. These projections reflect the continued optimism surrounding Broadcom’s growth prospects.

Broadcom’s stock hit a new high in yesterday’s session at $265.43 before steadying into the close at $261.08, up 1.67% from the previous close. This morning’s pre-market is also showing mild gains (+0.6%) early, potentially setting the stock up for new highs, or a shock if earnings do not go according to plan.

Broadcom’s recent performance has been nothing short of impressive. The company’s fiscal first-quarter 2025 earnings, reported in March, saw revenue surge to $14.92 billion, a 25% increase year-over-year, surpassing estimates of $14.61 billion. Adjusted earnings per share (EPS) also beat expectations, coming in at $1.60 against an anticipated $1.49. This strong showing was largely attributed to the company’s strategic investments in AI and the successful integration of VMware into its infrastructure software portfolio.

The stock has also been showing signs of strength, up 84.76% over the past 12 months, fueled by robust growth in its artificial intelligence (AI) and infrastructure software segments.

The AI segment has been a significant growth driver for Broadcom. In Q1 2025, AI revenue soared to $4.1 billion, a staggering 77% year-over-year increase. Broadcom’s AI offerings, which include custom AI chips and Ethernet networking solutions for data centers, are in high demand from major hyperscale customers. CEO Hock Tan has projected a serviceable addressable market for AI between $60 billion and $90 billion by 2027, highlighting the immense potential in this sector.

The acquisition of VMware has also proven to be a game-changer for Broadcom. The infrastructure software segment, bolstered by VMware, reported revenues of $6.7 billion in Q1, a 47% increase from the previous year. Broadcom’s successful transition of VMware products to a subscription-based model has been a key factor in this growth. Analysts are closely watching how this integration continues to unfold, expecting further synergies and revenue opportunities in the coming quarters.

The Street Expects

AVGO’s average target price is $250.52 and at the lower end of the scale it is $200.00 and the higher end is $301.50. The current share price is $261.08, which is above the average price target, potentially indicating the need for a strong quarter to sustain bullish momentum.

Despite these potential headwinds, the prevailing sentiment surrounding Broadcom remains positive. Many analysts have positive sentiments on the shares and are anticipating continued growth driven by AI initiatives and VMware integration. Citi, Melius Research and Redburn Atlantic all maintain “Buy” ratings on the shares in the past week. Oppenheimer and Mizuho label the shares “Outperform” and Susquehanna have rated AVGO “Positive”. All analysts to act in recent days have moved positive ahead of the earnings release.

From the bear perspective, however few it may seem there are, the market might be overly optimistic about Broadcom’s prospects. While the AI boom is undeniable, the sustainability of such rapid growth is questionable. The intense competition in the AI chip market from companies like Nvidia and AMD could erode Broadcom’s market share and pricing power. Furthermore, the successful integration of VMware, while promising, is not without its challenges.

Cultural clashes, integration complexities, and potential customer attrition could all weigh on the company’s performance. The market seems to be pricing in near-perfect execution, leaving little room for error. Moreover, Broadcom’s reliance on a few large hyperscale customers for its AI revenue makes it vulnerable to shifts in their spending patterns.

If these customers decide to diversify their chip suppliers or reduce their capital expenditures, Broadcom’s AI growth could slow down significantly. From this perspective, Broadcom’s current valuation appears stretched, and the stock may be vulnerable to a correction if the company fails to meet the lofty expectations.

As investors brace for the earnings release, all eyes will be on Broadcom’s ability to maintain its winning streak. A strong earnings report, coupled with positive guidance for the future, could send the stock to new highs. However, any signs of weakness or a failure to meet expectations could trigger a move down to support.