TLDR
- Broadcom’s Q1 FY2026 results arrive March 4 following market hours
- Analysts project $19.1 billion in sales, marking approximately 28% year-over-year expansion; adjusted EPS expected at $2.03
- Margin compression remains top investor concern — artificial intelligence-related sales generate thinner margins compared to traditional segments
- Average analyst price objective stands near $433, while post-December projections cluster around $458
- UBS maintains Buy recommendation with $475 target; DA Davidson starts coverage at Neutral
Broadcom plans to unveil its Q1 FY2026 financial results on March 4 following the closing bell.
The semiconductor giant has endured a turbulent period recently. Following its December 2025 quarterly disclosure, AVGO plummeted from above $400 to approximately $340 within days, staged a temporary rebound toward $355, before sliding beneath $310 in early February. Current trading hovers near $330.
That represents a decline exceeding 15% since the previous earnings announcement — even as Wall Street analysts have mostly maintained optimistic price projections.
Analysts anticipate Q1 sales reaching $19.1 billion, aligning with Broadcom’s internal forecast. This would represent 28% expansion compared to the prior year.
The consensus for adjusted earnings per share stands at $2.03, signaling approximately 26% growth. Broadcom typically refrains from providing specific adjusted EPS guidance, though its projections historically lean conservative.
The semiconductor manufacturer has either exceeded or matched revenue predictions in 22 of its past 24 quarterly reports, and surpassed adjusted EPS expectations in 23 of those 24 instances. This consistency speaks volumes.
However, exceeding forecasts doesn’t automatically translate to stock appreciation. Market sentiment will depend heavily on Q2 outlook, profitability commentary, and management’s messaging during the conference call.
The Gross Margin Question
The primary concern surrounding this earnings release centers on gross profitability.
During the previous quarter, Broadcom delivered a gross margin approaching 78% — ranking among the strongest of any major U.S. chip manufacturer. Yet the company warned that Q1 gross margin would decline approximately 100 basis points sequentially, attributed to an increased proportion of AI-related revenue.
The underlying dynamic is clear: artificial intelligence chip transactions generate lower gross margins than traditional product sales. As AI expands more rapidly than legacy operations, the aggregate margin profile deteriorates.
Market participants will monitor whether gross margin lands near 77% or above. Analysts are expected to probe management regarding how much further margins might contract throughout the remainder of FY2026.
Current Q2 FY2026 projections call for $20.35 billion in revenue — representing roughly 36% year-over-year expansion. Adjusted EBITDA margin estimates for Q2 sit at 68.5%, consistent with Broadcom’s stated guidance.
Where Analysts Stand
Despite the stock’s recent weakness, Wall Street has largely maintained its optimistic stance.
The average price target hovers around $433, suggesting approximately 30% upside potential from present levels. Targets established following the December report average closer to $458 — implying roughly 38% appreciation potential.
Citigroup recently adjusted its target downward from $480 to $458, marking the sole reduction tracked by MarketBeat since the December disclosure.
UBS confirmed its Buy rating with a $475 price objective on February 24. The investment bank observed Broadcom’s semiconductor operations trade at 20x P/E, 23x EV/free cash flow, and 17x EV/EBITDA — each metric approximately one turn premium to Nvidia and comparable companies. UBS also highlighted potential VMware customer attrition risk in 2026 and 2027 as three-year contracts approach renewal.
DA Davidson launched coverage with a Neutral stance, expressing concerns regarding Broadcom’s competitive positioning in the AI ASIC sector over the long term.
Jefferies confirmed a Buy recommendation, emphasizing Broadcom’s strategic position across AI and networking sectors.
On the product development front, Broadcom recently introduced the BroadPeak chip, manufactured using 5nm CMOS process technology and designed for next-generation 5G and 6G infrastructure. The company projects up to 40% power efficiency improvement relative to current alternatives.
A German court also mandated Renault cease sales of its Megane and Clio vehicle models following a patent infringement case with Broadcom concerning ethernet network cable connection technology.
