Key Takeaways
- UBS analyst Timothy Arcuri increased his Broadcom price target to $490 from $475, suggesting approximately 17% potential gains from present trading levels.
- The semiconductor giant is scheduled to release its fiscal second-quarter results on June 3.
- Arcuri reduced Anthropic revenue projections following Broadcom’s transition from full-rack systems to standardized ASIC chip configurations.
- Even with revised forecasts, UBS anticipates Broadcom will surpass Wall Street’s approximately $22 billion revenue guidance expectations.
- Broadcom maintains a Strong Buy rating consensus among analysts, collecting 26 Buy recommendations and four Hold ratings in the last three months.
Ahead of Broadcom’s (AVGO) fiscal second-quarter earnings report scheduled for June 3, UBS has increased its price target on the semiconductor giant to $490 from its previous $475 projection. Five-star analyst Timothy Arcuri issued the upgrade, identifying approximately 17% upside potential from current trading levels even as he moderates certain revenue expectations.
Shares of AVGO have climbed 23% since the beginning of the year, currently trading near $410, rebounding strongly from a challenging start to 2026 that witnessed a roughly 15% decline through March.
The stock has experienced significant momentum since April, though Arcuri’s recent analysis reveals a more complex underlying situation.
The adjustment centers on Broadcom’s modified approach to fulfilling chip orders for Anthropic. The semiconductor company transitioned away from full-rack AI systems toward a more standardized ASIC configuration. While this may appear to be a setback, the revised setup actually delivers superior profit margins.
However, this strategic shift does decelerate the initial revenue ramp. Arcuri reduced his Anthropic-specific revenue projection for 2026 to approximately $8 billion, a substantial decrease from his earlier $21 billion forecast. His 2027 estimate received a minor trim to $22 billion from $23 billion.
The analyst also lowered his comprehensive fiscal 2027 AI revenue outlook for AVGO to $133 billion from $145 billion, while making a slight downward adjustment to his 2027 earnings-per-share projection to $21.14.
UBS Maintains Optimistic Outlook
Despite these revisions, Arcuri remains firmly positive on the stock. He continues to anticipate Broadcom will deliver Q2 revenue guidance exceeding Wall Street’s consensus estimate of approximately $22 billion.
His projections show AI revenue reaching $13.6 billion in Q3 by itself — a figure that would maintain Broadcom’s trajectory toward an impressive full-year total.
Chief Executive Officer Hock Tan has identified $100 billion in AI revenue as a feasible objective for 2027. This would represent a fivefold expansion from the $20 billion Broadcom generated from AI during the previous year.
Arcuri’s elevated price target also accounts for broader valuation expansion across the semiconductor sector. The recent industry-wide rally has elevated multiples throughout the space, providing justification for the increased target despite the trimmed underlying projections.
XPU Technology Remains in Early Expansion Phase
Broadcom’s XPU chips — specialized silicon engineered for AI inference applications — continue their scaling phase. The company maintains partnerships with Alphabet, Anthropic, OpenAI, and Meta Platforms, with each arrangement tailored to individual client requirements.
Inference workloads, where AI models are deployed for practical applications rather than training, are projected to expand as AI adoption reaches maturity. This represents a favorable trend that hasn’t yet fully materialized in reported figures.
Broadcom’s total revenue for 2025 reached $63.9 billion. Should the $100 billion AI revenue objective come to fruition, it would effectively double the company’s overall size.
Wall Street’s consensus forecasts project Broadcom’s earnings expanding at a 41% annual rate over the coming three to five years.
AVGO’s price-to-earnings multiple has expanded from below 60 to above 80 throughout the recent rally, positioning the PEG ratio around 2 — not particularly cheap, but analysts maintain the growth trajectory supports the valuation.
Broadcom’s Strong Buy consensus rating reflects 26 Buy recommendations and four Hold ratings issued during the past three months. The mean analyst price target stands at $477.81.
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