Broadcom Earnings Expectations Positive, AI Revenue Strong
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Broadcom Earnings Expectations Positive, AI Revenue Strong
Morgan Stanley upgrades Broadcom rating to Buy, expects significant growth in AI revenue.
- Broadcom earnings expectations are high, AI network checks and TPU demand are strong.
- Expected significant growth in XPU market share in 2027, huge long-term growth potential.
- Adjusted 2H26 AI growth assumptions, but still bullish on overall performance.
- Mediatek is a CoT risk, but does not affect the overall view.
- VMware integration expected to be successful, expected to improve cash flow.
Report interpretation
Overview
This research report mainly analyzes the earnings expectations of Broadcom Inc. (AVGO.O), especially its performance in the AI sector. Morgan Stanley upgraded the company's rating to Buy and increased its 2027 EPS multiple.
Core views
The report believes Broadcom will meet high expectations this quarter, mainly due to strong growth momentum in AI networks and ASICs. Although growth assumptions for 2H26 have been adjusted in the short term, XPU market share is expected to increase significantly in 2027, with huge long-term growth potential. In addition, VMware integration is expected to be successful, helping to improve cash flow. Although there are certain CoT risks, Morgan Stanley believes this will not change its overall view on Broadcom.
Analysis framework
The report derives the conclusion of upgrading the rating step by step by analyzing the growth of Broadcom's AI network and ASIC businesses, combined with market expectations and company performance. At the same time, the report also considers risk factors faced by the company, such as CoT risks and the impact of competitors, but believes these risks will not have a significant impact on the company's long-term growth.
Methodology notes
AI Revenue Forecast and Market Share Growth Analysis
The report evaluates Broadcom's financial performance and prospects by analyzing the growth trends of AI revenue and market share.
Asset mapping & comparison
Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).
- Broadcom Inc. (AVGO.O)Benefits from AI revenue growth and market share increase
- Strengths
- Strong AI network and ASIC business growth momentum, VMware integration expected to be successful
- Weaknesses
- Short-term 2H26 growth assumption adjustment, Mediatek is a CoT risk
- Comparison
- Compared to market consensus, Morgan Stanley is more optimistic about Broadcom's long-term growth
- Risks
- CoT risks may affect short-term performance, but will not change long-term growth expectations
Key data
- AI Revenue Forecast$10.8bn (AprQ), $16.9bn (JulQ)AI revenue expectations for Q2 and Q3, significant year-over-year growth.
- 2027 AI Revenue Forecast~$120bnAI revenue is expected to reach $120 billion in 2027, with huge growth potential.
- Target Price$485Morgan Stanley raises target price to $485.
Impact & implications
The report believes that Broadcom's strong performance in the AI sector will drive its stock price up, especially under the expectation of market share growth in 2027. In addition, the successful integration of VMware will further enhance company value.
Risks
- CoT risks, Mediatek may capture some market share
What to watch
- 2027 XPU market share growth situation
- VMware integration progress