Broadcom (AVGO) Stock: Analysts Call for 39% Upside Following Recent Pullback

TLDR

• Multiple analysts raised price targets with Truist hitting $510 and New Street at $420, both maintaining Buy ratings
• Q4 2025 revenue reached $18 billion, beating estimates with AI semiconductor revenue surging 74% year-over-year
• Stock fell 11% after earnings as AI backlog dropped to $73 billion from $110 billion and margins face pressure
• Q1 2026 guidance calls for $19.1 billion revenue with AI revenue expected to double to $8.2 billion
• Full-year fiscal 2025 delivered record $43 billion adjusted EBITDA with $26.9 billion free cash flow

Broadcom just posted impressive numbers but investors aren’t celebrating. The stock dropped more than 11% following the December 11 earnings release despite beating expectations across the board.

Broadcom Inc., AVGO

The company delivered Q4 2025 revenue of $18 billion, crushing the $17.5 billion estimate. Earnings hit $1.95 per share versus the $1.87 consensus.

AI semiconductor revenue jumped 74% year-over-year. That’s the kind of growth that typically sends stocks higher, not lower.

So what spooked the market? Two main issues emerged from the earnings call.

First, the AI backlog shrank from $110 billion in Q3 to $73 billion in Q4. Second, management declined to provide full-year fiscal 2026 guidance. Investors trading at 26 times sales wanted more visibility.

Gross margins are also taking a hit. Management warned of a 100 basis point sequential drop in Q1 as AI products comprise a larger revenue mix.

Wall Street Sees Opportunity

Analysts are taking the opposite view of retail investors. Truist lifted its price target to $510 from $500 on December 19. New Street moved to $420 from $400. Both firms kept Buy ratings.

The analyst community shows overwhelming support. Ninety-two percent of 50 analysts rate the stock a Buy. The median price target of $475 implies 39% upside from current levels.

Truist believes AI infrastructure semiconductor stocks trade cheap relative to their growth potential. The firm expects continued AI capex increases through 2026.

An insider seems to agree with Wall Street. Recent SEC filings show an insider purchase worth $325,129.

Growth Trajectory Remains Intact

The forward-looking numbers tell a different story than the post-earnings reaction. Broadcom guided Q1 2026 revenue to $19.1 billion, well above the $18.5 billion consensus. That represents 28% year-over-year growth.

AI revenue is set to double in the current quarter to $8.2 billion. Last year’s total AI revenue was $20 billion, growing 65% year-over-year.

The $73 billion AI backlog should be fulfilled over six quarters. That translates to roughly $12 billion per quarter or $48 billion over the next four quarters. Compare that to last year’s $20 billion in AI revenue.

The non-AI business generated $43.9 billion last year with 11% growth. If that pace continues, total fiscal 2026 revenue could reach $97 billion. That would represent 51% growth versus 23% in fiscal 2025.

Fiscal 2025 results showed adjusted EBITDA climbing 35% to $43 billion. Free cash flow remained solid at $26.9 billion. The company expects adjusted EBITDA at 67% of revenue for Q1 2026.

The total consolidated backlog stood at $162 billion last quarter. AI represented less than half of that figure. Broadcom generates revenue from infrastructure software, networking equipment, and smartphone chips beyond AI semiconductors.

Management projects AI revenue will double in Q1 2026 to $8.2 billion, establishing a strong foundation for fiscal year growth expectations.

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