Goldman Sachs Broadcom (AVGO.US): Strong AI Revenue Momentum for 2027, Despite Modest Near-Term Shortfall
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Goldman Sachs reaffirms its Buy rating on Broadcom, highlighting robust artificial intelligence revenue momentum projected for 2027 despite a modest near-term shortfall relative to elevated market expectations. For the second quarter of fiscal 2026, Broadcom reported AI revenue growth of 40% year-over-year, although overall revenue slightly missed consensus forecasts. The firm emphasizes that the temporary revenue discrepancy masks the enduring structural advantages Broadcom holds in custom AI silicon and networking infrastructure. As hyperscale customers accelerate capital expenditure on AI infrastructure, Broadcom is strategically positioned to capture significant market share. The company expects its AI revenue trajectory to demonstrate exceptional strength through 2027, effectively offsetting current softness in non-AI segments such as broadband and storage. Management remains highly optimistic regarding the long-term AI revenue pipeline. Goldman Sachs views the recent share price pullback as an attractive entry point, maintaining its target price based on 2027 earnings potential. The investment thesis remains anchored on Broadcom leadership in application-specific integrated circuits and critical networking hardware. Key risks to monitor include a potential deceleration in AI capital spending, intensifying competitive pressures within the semiconductor industry, and unforeseen global supply chain disruptions that could impact delivery schedules.
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