The AI chip race has produced a handful of clear winners. Broadcom is one of them. But the question heading into its next earnings report is no longer about whether it is a top AI stock to own.
The real debate now is: Can a company already pulling in billions from artificial intelligence keep growing fast enough to justify its lofty valuation?
At least one major Wall Street firm thinks the answer is yes, and it is putting that view on record before Broadcom reports next month.
Why Broadcom is a top chip stock
To understand why Citi’s call carries weight, you first need to understand what Broadcom (AVGO) does in the AI world.
Broadcom designs custom AI chips called XPUs, short for accelerator processing units, tailored specifically for each of its six major customers. Think Google, Meta, and now OpenAI.
These chips are built from the ground up to run each company’s specific AI workloads far more efficiently than off-the-shelf processors can.
More AI:
Beyond chips, Broadcom also supplies the networking silicon that connects thousands of these processors inside massive AI data centers.
That combination makes Broadcom deeply embedded in how the world’s biggest technology companies build their AI infrastructure.
In its fiscal first quarter of 2026 (ended in January):
Total revenue rose by 29% year over year to record $19.3 billion.
AI semiconductor revenue more than doubled year over year to $8.4 billion.
Adjusted earnings before interest, taxes, depreciation, and amortization, or EBITDA, totaled $13.1 billion, indicating a margin of 68%.
These numbers reflect a business that six of the world’s most important technology firms depend on to power their AI ambitions.
Citi makes a move before June 3 earnings
Citi analyst Atif Malik raised his price target on Broadcom from $475 to $500 on May 12, keeping his Buy rating in place and naming the stock his top semiconductor pick for 2026.
Broadcom reports its fiscal second quarter results on June 3, and Malik went on the record before the announcement.
Malik estimates AI revenue will grow from roughly half of Broadcom’s total sales today to around 81% of the business by late fiscal 2028.
“We have line of sight to achieve AI revenue from chips, just chips, in excess of $100 billion in 2027. We have also secured the supply chain required to achieve this.”
So the ambition is not analyst speculation layered atop cautious guidance. It is directionally consistent with what management is already saying publicly.
For the current quarter ending in April 2026, Wall Street’s average revenue estimate stands at $22.08 billion, according to Yahoo Finance. That would represent roughly 47% growth from the same period a year earlier.
Comparatively, adjusted earnings are projected to expand from $1.58 per share to $2.39 per share.
For the full fiscal year 2026, the average revenue estimate sits at $103.27 billion. Next year, the average jumps to $158.86 billion, though estimates range widely, from $90.65 billion to $197.41 billion, reflecting the uncertainty that still surrounds the pace of AI infrastructure spending.
Hock Tan, CEO of Broadcom expects AI sales to accelerateNurPhoto/Getty Images)
Is AVGO stock still undervalued?
Valued at a market cap of almost $2 trillion, Broadcom stock has returned a staggering 3,500% to shareholders over the past decade, after adjusting for dividend reinvestments.
Analysts tracking AVGO stock forecast revenue to increase from $63.9 billion in fiscal 2025 to $288 billion in fiscal 2030.
In this period, adjusted earnings are projected to expand from $6.82 per share to $31 per share.
If Broadcom stock is priced at 30x forward earnings, similar to its current multiple, it could double from current levels within the next 40 months.
Broadcom’s path to Tan’s $100 billion AI target in 2027 is becoming easier to map out.
The company now works with six major AI customers, up from five a quarter ago.
OpenAI recently joined the list, with its first custom XPU expected to ship in volume in 2027, offering more than 1 gigawatt of computing capacity.
Anthropic is scaling fast too, with demand expected to exceed three gigawatts of compute next year.
Meta’s custom chip program, which some analysts had written off, is actively ramping.
On the networking side, Broadcom’s Tomahawk 6 switch chip, operating at 100 terabits per second, is already the only product of its kind on the market.
AI networking revenue grew 60% year over year last quarter and is expected to represent 40% of total AI revenue in the current quarter.
Tan told analysts on the earnings call that Broadcom has secured supply chain capacity in leading-edge wafers, high-bandwidth memory, and substrates through 2028, an unusually long visibility window that gives the company a structural advantage over rivals still scrambling for components.
The scale of what is being built here is hard to overstate, making Broadcom stock a top buy despite its lofty valuation.
