Key Takeaways
- Broadcom’s fiscal Q1 earnings arrive Wednesday, March 4, following the market close
- Wall Street forecasts earnings per share of $2.03 and revenue reaching $19.26 billion, compared to $1.60 and $14.92 billion in the year-ago period
- HSBC has dramatically increased AI networking revenue projections — anticipating $17B in FY26 and $30B in FY27
- Despite maintaining a Buy rating, HSBC reduced its price target from $535 down to $450 due to AI sector valuation adjustments
- Market sentiment remains guarded following Nvidia’s 5.5% decline after delivering results that exceeded expectations
As Broadcom prepares to unveil its fiscal first-quarter financial results on Wednesday, Wall Street’s expectations run high, though a cloud of uncertainty hangs over investor confidence.
The semiconductor and enterprise software giant is projected to deliver adjusted earnings of $2.03 per share alongside revenue totaling $19.26 billion. These figures represent substantial growth from the corresponding quarter last year, which saw $1.60 per share and $14.92 billion in revenue.
The company’s semiconductor solutions division is anticipated to drive much of this expansion, with analysts forecasting revenue of $12.4 billion — marking a remarkable 51% increase year-over-year. Meanwhile, the infrastructure software segment is expected to contribute $6.99 billion, representing approximately 4.3% growth.
Broadcom’s artificial intelligence networking division has emerged as a crucial engine for expansion. The firm previously revealed a substantial $20 billion AI networking backlog, though HSBC analyst Frank Lee suggests this figure may actually understate future demand.
Lee has recalibrated his AI networking revenue projections for FY26 and FY27 to $17 billion and $30 billion respectively — figures that stand 43% and 64% above current Street consensus. This substantial disconnect highlights the divergence between mainstream analyst views and HSBC’s more aggressive outlook.
Yet despite this bullish revenue forecast, HSBC trimmed its price objective from $535 to $450. The adjustment reflects what Lee describes as a comprehensive “valuation reset” sweeping across AI-focused enterprises. While maintaining his Buy recommendation, the reduced target acknowledges the sector’s changing price dynamics.
Big Tech’s Continued Infrastructure Investment
Analyst optimism persists partly because major technology companies continue ramping up spending. Melius Research analyst Ben Reitzes highlighted that both Meta and Alphabet have elevated their 2026 capital expenditure plans by roughly 30%. This sustained commitment to AI infrastructure development directly benefits providers like Broadcom.
“The rationale for spending remains strong,” Reitzes noted, pointing out that OpenAI and Anthropic have similarly increased revenue projections as corporate adoption accelerates.
Reitzes maintains a Buy rating with a $530 price target, characterizing the upcoming report as “another outstanding quarter” driven by the expanding order backlog.
Lessons from Nvidia’s Market Response
However, not all observers approach the earnings release with confidence. Nvidia delivered fourth-quarter results on February 25 that surpassed estimates and included guidance above expectations. Despite this, shares tumbled 5.5% the following trading session.
Broadcom experienced a sympathetic 3.2% decline on February 26. This market behavior — where superior results still trigger selling — has created nervousness among traders.
Paul Meeks from Freedom Capital Markets voiced this apprehension explicitly: “I’m a bit anxious about the reaction to AVGO’s quarterly report and guidance on March 4, particularly given the reactions last week to the announcements from other AI bellwethers.”
Valuation metrics compound these concerns. Broadcom currently commands a forward price-to-earnings multiple of 26.9x, exceeding both Nvidia at 21.3x and AMD at 25.7x.
UBS analyst Timothy Arcuri observed that recent software sector weakness has contributed to Broadcom’s relative underperformance in 2026. While shares have climbed 64% over the trailing twelve months, they’ve retreated 9% year-to-date.
According to HSBC’s Lee, the next significant catalyst following earnings will likely involve positive developments surrounding AI networking expansion, an area where Broadcom’s portfolio continues growing at an accelerated pace.
