Broadcom (AVGO) reported its Q1 2026 earnings yesterday, posting revenue of $19.31B (+29% YoY) and GAAP EPS of $1.50 (+32% YoY). It beat the market estimates by narrow margins (less than 1% revenue beat), mostly fueled by AI growth. Broadcom’s share price climbed to $317.12, marking a 1.18% increase.
Despite the positive share price movement following the earnings report, experts view it as inadequate to allay investor concerns about the return on investment (ROI). The semiconductor and infrastructure giant is shifting from selling chips at high margins to building full-blown AI systems that push revenue at the expense of squeezing the margins. Investors are also reckoning with the risk of potential overvaluation, since the shares are already trading at a premium.
Q1 2026 Earnings and the <1% Revenue Beat
The analyst estimates for Broadcom’s Q1 revenue stood at $19.26B, which it beat by 0.99% by reporting an adjusted net revenue of $19.31B. The company’s CEO, Hock Tan, highlighted AI’s role in a 29% year over year growth in revenue, indicating increased interest in the same arena. Broadcom’s semiconductor revenue touched $12.5B this quarter, a massive 52% increase year-over-year.
The key metrics (GAAP) of the quarter:
| Metric | Q1 2026 | Q1 2025 | YoY Change |
|---|---|---|---|
| Net revenue | $19.3B | $14.9B | +29% |
| Net income | $7.3B | $5.5B | +34% |
| Diluted EPS | $1.50 | $1.14 | +32% |
| Cash flow from operations | $8.3B | $6.1B | +35% |
| Free cash flow | $8.0B | $6.0B | +33% |
Revenue Breakdown (GAAP)
Semiconductors still lead the charge for Broadcom with a 52% growth over the year. It is likely to remain the cash cow that enables the company to venture into the AI infra-software segment. Despite significant investments, the company has not been successful in growing the revenue from AI software.
| Segment | Q1 2026 Revenue | Mix 2026 | Q1 2025 Revenue | Mix 2025 | YoY Change |
|---|---|---|---|---|---|
| Semiconductor solutions | $12.5B | 65% | $8.2B | 55% | +52% |
| Infrastructure software | $6.8B | 35% | $6.7B | 45% | +1% |
| Total net revenue | $19.3B | 100% | $14.9B | 100% | +29% |
Outlook for Next Quarter
Broadcom expects revenue of $22 Billion in Q2 FY26- a 47% growth in Year Over Year. This indicates that the company is confident about riding the AI wave better in 2026 as it’s preparing to ramp up semiconductor production to meet the increasing demand. Although it plans to venture into comprehensive AI system architecture, customs and ASICs, and networking chips will continue to dominate its income stream.
Analyst View
Although the ROI concerns seem to be restraining the AVGO share price, Wall Street sees significant upside. Timothy Arcuri from UBS projects an upside of 49.59% with a target price of $475. Goldman Sachs’ top analyst James Schneider sees a 41.72% upside with a target price of $450.
The analyst’s predictions for the target price go as high as $630 and as low as $335. Robert W. Baird’s top analyst, Tristan Gerra, predicts a massive upside of 98.41% with a target price of $630. The Wall Street consensus is a target price of $456.96 with an implied upside of 43.91%.
