Broadcom's AI Surge: Why Analysts See a Rare Opportunity in Q2 Earnings

As the AI revolution accelerates, Broadcom (AVGO) stands at the intersection of two unstoppable forces: surging demand for advanced semiconductors and a stock price lagging behind its growth trajectory. With Q2 earnings set to report on June 5, 2025, analysts are rallying behind the company's ability to capitalize on AI-driven tailwinds while resolving near-term headwinds. Here's why now could be the moment to act.

The Q2 Earnings Catalyst
Broadcom's upcoming earnings report is a watershed moment. Analysts project Q2 revenue of $15.02 billion, a 20% year-over-year jump, fueled by its AI and networking divisions. Adjusted net income is expected to soar to $7.8 billion, up 45% from 2024, with EPS hitting $1.57—a 43% increase. The crown jewel? AI revenue, forecasted to hit $4.42 billion, up 42% year-over-year, solidifying Broadcom's status as the “No. 2 AI franchise after NVDA” (NVIDIA).

Analyst Optimism: Buy Ratings and Rising Targets
Morgan Stanley's bullish stance is clear: 13 of 14 analysts rate Broadcom a “buy” or higher, with a consensus price target near $247—just 2% above current levels. But dig deeper, and the story gets juicier. Mizuho Securities recently hiked its target to $300, citing Broadcom's leadership in AI custom silicon, networking, and its “cash cow” software division. With free cash flow projected at $33 billion for fiscal 2025, the company is primed to reward shareholders through buybacks and dividends.

AI Growth Potential: The $60B–$90B Prize
Broadcom isn't just riding AI's wave—it's shaping it. Its 3.5D packaging and co-packaged optics (CPO) technologies are critical for next-gen AI chips, enabling faster, energy-efficient computing. Analysts estimate Broadcom could capture 60–70% of a $60B–$90B AI market by 2027, with wins from giants like Google and Meta. Meanwhile, its networking division (Ethernet switches, software solutions) remains a steady cash generator, contributing ~50% of revenue.

Inventory Concerns? Short-Lived, Says Morgan Stanley
Supply chain hiccups caused inventory buildup earlier this year, but analysts see this as a temporary blip. With demand outpacing supply in AI and data center markets, Broadcom's backlog will clear quickly. Institutional ownership at 76% and a recent $10 billion share buyback authorization further signal confidence.

Valuation: A Discounted Growth Leader
Despite its dominance, Broadcom trades at a P/E of 195.35, far lower than NVIDIA's 300+ multiple. But growth justifies this: 42% AI revenue growth vs. NVIDIA's 30%+ slowdown. At $247, Broadcom is undervalued relative to its AI trajectory. Even the conservative consensus target implies 20% upside by 2026, while Mizuho's $300 target suggests a 21% gain.

The Bottom Line: Buy Now or Miss the AI Boom
Broadcom's Q2 earnings will be a litmus test for its AI ambitions—but the fundamentals are undeniable. With $33B in free cash flow, a dividend yield of 0.99%, and a stock that's risen only 4% in 2025 despite soaring AI demand, this is a rare opportunity to buy a growth leader at a discount.

The catalyst is coming: June 5, 2025. If earnings beat expectations—and analysts are calling for it—this stock could soar. Don't let the short-term inventory noise distract you. Broadcom's AI future is already here.

Act now before the market catches up.