Broadcom's AI-Powered Surge: Why Q2 Results Signal a $300+ Stock in 2026

The semiconductor and software giant Broadcom (AVGO) is poised to deliver another blockbuster quarter, with Q2 2025 earnings acting as a catalyst to unlock its full potential in the AI revolution. With a $60B–$90B addressable market for AI chips and a software business generating 50% of total revenue, Broadcom's dominance in custom silicon, networking, and recurring software subscriptions positions it as a must-own stock for 2025–2026. Let's break down why this is a buy-and-hold opportunity with asymmetric upside.

Q2 Earnings: A Catalyst for Multi-Decimal Growth

Broadcom's Q2 results, due June 5, are expected to crush estimates, with consensus EPS of $1.57 (a 43% YoY jump) and revenue hitting $14.9B. This follows Q1's record $14.9B in revenue, driven by a 77% surge in AI-related sales to $4.1B. Analysts project AI revenue to hit $4.4B in Q2, fueled by its leading-edge 3.5D chip packaging and co-packaged optics (CPO) technologies. These innovations allow AI systems to handle data at hyperscale speeds, making Broadcom indispensable to cloud giants like AWS, Microsoft, and Google.

The networking segment, which includes switches and routers, is also booming. Broadcom's share of the $12B data center switch market is nearing 60%, thanks to its silicon photonics and CPO integration. This hardware-software synergy creates a “moat” no competitor can breach.

AI & CPO Tech: Broadcom's Unassailable Lead

Broadcom's advantage isn't just about selling chips—it's about owning the full-stack infrastructure for AI. Its 3.5D chip packaging allows AI models to run 2–3x faster than traditional GPUs, while CPO eliminates latency by embedding optics directly into the chip. This is critical as AI workloads shift from GPUs to custom silicon, and hyperscalers demand efficiency.

Analysts estimate Broadcom's AI revenue could hit $18B by 2026, capturing over 20% of the AI chip market. Competitors like NVIDIA are playing catch-up, but Broadcom's vertically integrated model—combining silicon, software, and networking—creates switching costs that lock in customers.

Cash Cow Software: The Recurring Revenue Machine

While AI grabs headlines, Broadcom's software division is a quiet profit powerhouse. VMware, its crown jewel, generates $6.5B in annual revenue with a 90% gross margin, and its shift to full licensing models is boosting recurring revenue to 50% of total sales. This software flywheel ensures steady cash flows, even as hardware cycles fluctuate.

With $33B in free cash flow forecasted for FY2025, Broadcom has the financial muscle to buy back shares (a $10B repurchase program is underway) or double down on AI R&D. This cash engine is why the stock trades at a 5.5x EV/FCF multiple, a bargain for a company growing EPS at 50%+ annually.

Wall Street's Bullish Consensus: A $300 Stock Isn't Overly Optimistic

Analysts are unanimous: Broadcom is a “Strong Buy.” Out of 31 analysts, 28 rate it as such, with a consensus price target of $242.19—but this ignores Mizuho's $300 price target, which assumes AI revenue hits $20B by 2026. Even if the stock merely reaches the high end of current estimates, that's a 27% upside from current levels.

The recent dip after Huawei's AI chip news was a buying opportunity. Broadcom's CPO and 3.5D tech are years ahead of competitors, and its customer base spans the entire tech ecosystem—not just U.S. firms. This stock isn't just a semiconductor play; it's a decade-long secular growth story.

Conclusion: Act Now—This Is a 2025-2026 Moonshot

Broadcom's Q2 results will cement its status as the backbone of the AI era. With $4.4B in AI revenue, $33B in free cash flow, and a software moat that rivals Microsoft's, this stock is primed to outperform even as macroeconomic headwinds loom.

The $242 consensus price target is a floor, not a ceiling. Investors who buy now can ride Broadcom's secular growth to $300+ over the next 18 months. The question isn't whether to buy—it's how much you can afford to own.

Final Call: Broadcom isn't just a semiconductor company—it's the operating system of the AI revolution. With earnings around the corner and Wall Street's price targets soaring, this is a buy at any price below $200. Don't miss the train.