Citi Upgrades Broadcom (AVGO) Price Target to $500, Calls It Top Semiconductor Stock for 2026

Key Highlights

• Citi has upgraded Broadcom’s price target to $500 from $475 while maintaining its Buy recommendation
• The firm designates AVGO as its top semiconductor selection for 2026 before Q2 results on June 3
• Artificial intelligence revenue expected to expand from approximately 49% of sales currently to roughly 81% by fiscal Q4 2028
• The company serves six prominent AI clients, including Google, Meta, Anthropic, and OpenAI
• Analysts maintain a Strong Buy consensus rating with a mean price target of $468.79

Citi has elevated its valuation forecast for Broadcom to $500 per share from its previous $475 mark, positioning ahead of the semiconductor giant’s fiscal second-quarter financial results scheduled for June 3.

Broadcom Inc., AVGO

The financial institution maintained its Buy recommendation while designating AVGO as its premier semiconductor investment choice for 2026.

Shares of Broadcom were changing hands near $410 on Tuesday, experiencing a decline exceeding 4% during the session.

Atif Malik, an analyst who holds the third position among Wall Street equity researchers, anticipates April and July quarter revenues and earnings per share will marginally surpass consensus forecasts. He attributes this outlook primarily to sustained AI demand.

Citi’s updated $500 valuation applies a 20x earnings multiple to its fiscal 2028 EPS projection of $25. The firm indicates that extending the timeline to that fiscal year demonstrates “enhanced earnings clarity.”

Artificial Intelligence Revenue Poised for Dramatic Expansion

Malik forecasts artificial intelligence revenue will surge from approximately 49% of Broadcom’s overall sales currently to about 81% by the fourth quarter of fiscal 2028.

He now anticipates Google and Anthropic together will generate roughly $80 billion in AI-focused revenue. Overall AI sales are predicted to reach $115 billion in 2027, an increase from the previous $100 billion projection, before advancing to $180 billion in 2028.

Broadcom presently serves six major artificial intelligence customers: Google, Meta, Anthropic, OpenAI, and two unnamed clients Malik suspects include ByteDance. The chipmaker is additionally collaborating with three other customers on bespoke AI chip solutions.

The analyst adjusted FY26, FY27, and FY28 EPS projections by -4%, +5%, and +34% respectively. These modifications incorporate enhanced TPU shipment forecasts and a transition in the Anthropic collaboration from rack deliveries to chip deliveries.

Chip sales yield superior gross margins, although they account for merely approximately 20%–25% of rack revenue value.

Competition Concerns and Software Division

Regarding competitive dynamics, Malik indicates a five-year extended agreement with Google should alleviate worries about Google developing proprietary chip alternatives. He maintains that competitors would struggle to match the technological advancement.

Citi additionally dismissed concerns surrounding Broadcom’s enterprise software division, characterizing worries as “exaggerated.”

The software segment maintains deep integration within major organizations, especially enterprises exceeding 10,000 employees. Malik observes minimal evidence of clients migrating toward competing solutions.

Enterprise security constitutes only a modest revenue portion currently, but Malik notes its significance is expanding as organizations emphasize infrastructure protection during the agentic AI period.

Wall Street sentiment largely aligns. Broadcom commands a Strong Buy consensus featuring 25 Buy recommendations and 4 Hold ratings. The mean price objective stands at $468.79, suggesting approximately 12% appreciation potential from present trading levels.

Broadcom releases fiscal Q2 financial results on June 3.

The post Citi Upgrades Broadcom (AVGO) Price Target to $500, Calls It Top Semiconductor Stock for 2026 appeared first on Blockonomi.