Broadcom Inc. (AVGO): Is the Earnings Momentum Sustainable Ahead of the June 5 Report?

Broadcom Inc. (AVGO) has been a standout performer in 2025, with its stock surging 83% year-to-date (YTD) as of June 1, 2025. This blistering run has investors wondering: Can the company sustain its earnings momentum ahead of its June 5 earnings report? Let's dissect the data through the lens of Zacks Earnings ESP, historical beat trends, AI-driven revenue growth, and analyst consensus to answer this critical question.

Zacks Earnings ESP: A 70% Probability of a Beat?

The Zacks Earnings ESP (Estimated Surprise) score for Broadcom currently stands at +1.27%, signaling a heightened likelihood of an earnings beat over the consensus estimate. While the ESP itself measures the percentage difference between the “Most Accurate Estimate” ($1.59/share) and the Zacks Consensus ($1.57/share), Zacks' proprietary model combines this metric with broader factors like stock momentum and analyst revisions to derive a 70% probability of a positive surprise.

This is no small feat. A beat would mark the third consecutive quarter of outperformance, with Broadcom averaging a 4.41% earnings surprise over the past two quarters. Historically, stocks with such consistent beat patterns often see upward revisions to their earnings forecasts, creating a virtuous cycle for valuation multiples.

AI-Driven Revenue Growth: The $4.42B Catalyst

Broadcom's AI infrastructure play is the linchpin of its growth story. The company now projects AI-related revenue of $4.42B in Q2 2025, up from $3.2B in Q1, fueled by demand for its chips, software, and networking solutions in data centers and supercomputers. This segment is growing at a 35% annual clip, far outpacing its traditional semiconductor and enterprise software businesses.

Critically, Broadcom is not just a hardware supplier—it's vertically integrating AI software (e.g., its hypervisor and workload optimization tools) to lock in recurring revenue streams. This strategy positions it as a full-stack partner to cloud giants like AWS and Google, which are racing to scale AI infrastructure.

Analyst Consensus: A Bullish but Cautious Consensus

While the Zacks Rank #2 (Buy) and the 70% beat probability suggest optimism, analysts are split on the stock's valuation. The current price-to-forward-earnings (P/E) ratio of 28.7x is 12% above its five-year average, reflecting high expectations. However, if Broadcom delivers on its AI revenue targets and maintains its beat streak, the multiple could expand further.

Risks: High Expectations and the NVDA Shadow

The $83B market cap is not without risks. First, Broadcom's valuation hinges on its ability to execute on AI. A miss on Q2's AI revenue ($4.42B) or a significant earnings shortfall could trigger a sharp sell-off. Second, NVIDIA (NVDA) remains a looming threat. Its dominance in GPU-driven AI computing could limit Broadcom's market share in high-margin AI segments.

Conclusion: A Buy with a Safety Net

Broadcom's combination of Zacks' 70% beat probability, its $4.42B AI revenue catalyst, and its Zacks Rank #2 (Buy) make it a compelling buy ahead of the June 5 report. However, investors should consider limiting exposure to 3-5% of their portfolio and setting a stop-loss at $650 (10% below current levels).

The stock's 83% YTD surge is no accident—it reflects a structural shift toward AI-driven growth. For those willing to bet on Broadcom's execution, the rewards could far outweigh the risks.

Act now, but don't ignore the risks.