Goldman Sachs: Broadcom (AVGO.US) — 2Q Earnings Preview
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Goldman Sachs previews Broadcom's (AVGO.US) FY26 second-quarter results, arguing that expectations look conservative: strong AI capex at key customers is partly offset by concerns over intensifying ASIC competition, and the bank sees upside to third-quarter guidance plus incremental FY27 detail. Investor focus rests on three issues: quantification of FY27 AI revenue, incremental ASIC competition from MediaTek and AMD, and data center and customer readiness for FY27 deployments.
Goldman's AI revenue estimates sit 1% above consensus for FY26 and 12% for FY27, with FY27 AI semiconductor revenue of $133.045B versus $118.837B for the street. Overall forecasts are also above: FY27 revenue of $186.986B (+7%) and FY27 EPS ex-SBC of $21.40 (+10%), with a 67.5% FY27 operating margin (+102bps). Infrastructure software FY27 of $34.987B sits below consensus $36.357B.
The 12-month target is $525, based on 30x normalized EPS of $17.50, implying 33.8% upside from $392.43 (the report text does not explicitly state a rating). Post-print, Goldman remains positive on FY26/27 custom XPU revenue and sees networking upside from data center build-outs and the Tomahawk 6 ramp. Key risks: slower AI infrastructure spend, custom compute share loss, lingering non-AI inventory digestion, and intensifying VMware competition.