The AI chip race has produced a handful of clear winners. Broadcom is considered one of them. However the query heading into its subsequent earnings report is not about whether or not it’s a high AI inventory to personal.
The true debate now could be: Can an organization already pulling in billions from synthetic intelligence continue to grow quick sufficient to justify its lofty valuation?
A minimum of one main Wall Street agency thinks the reply is sure, and it’s placing that view on document earlier than Broadcom studies subsequent month.
Why Broadcom is a high chip inventory
To know why Citi’s name carries weight, you first want to know what Broadcom (AVGO) does within the AI world.
Broadcom designs customized AI chips known as XPUs, quick for accelerator processing items, tailor-made particularly for every of its six main prospects. Assume Google, Meta, and now OpenAI.
These chips are constructed from the bottom as much as run every firm’s particular AI workloads much more effectively than off-the-shelf processors can.
Extra AI:
Past chips, Broadcom additionally provides the networking silicon that connects hundreds of those processors inside large AI information facilities.
That mixture makes Broadcom deeply embedded in how the world’s greatest expertise corporations construct their AI infrastructure.
In its fiscal first quarter of 2026 (led to January):
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Whole revenue rose by 29% 12 months over 12 months to document $19.3 billion.
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Semiconductor AI revenue greater than doubled 12 months over 12 months to $8.4 billion.
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Adjusted earnings earlier than curiosity, taxes, depreciation, and amortization, or EBITDA, totaled $13.1 billion, indicating a margin of 68%.
These numbers replicate a enterprise that six of the world’s most essential expertise companies rely on to energy their AI ambitions.
Citi makes a transfer earlier than June 3 earnings
Citi analyst Atif Malik raised his value goal on Broadcom from $475 to $500 on Might 12, conserving his Purchase score in place and naming the inventory his high semiconductor choose for 2026.
Broadcom studies its fiscal second quarter outcomes on June 3, and Malik went on the document earlier than the announcement.
Malik estimates AI income will develop from roughly half of Broadcom’s whole gross sales at present to round 81% of the enterprise by late fiscal 2028.
Related: Goldman Sachs resets Broadcom stock forecast
He projects whole AI gross sales of $115 billion in 2027, rising to $180 billion in 2028.
CEO Hock Tan has himself pointed to greater than $100 billion in AI chip income in 2027 as a sensible goal.
In the course of the earnings call, Tan said:
