Broadcom Shares Garner Bullish Analyst Backing Amid AI Surge

Despite a recent sharp pullback in Broadcom's share price, major financial institutions are maintaining a decidedly optimistic outlook. The focus remains squarely on the company's rapidly expanding artificial intelligence revenue and substantial order backlog, even as near-term margin concerns and insider selling activity have introduced some volatility. The central question for investors is whether these risks outweigh the powerful growth narrative.

The bullish stance from analysts is grounded in robust quarterly performance. Broadcom's AI-related revenue for its fourth fiscal quarter surged 74% year-over-year to $6.5 billion. Management anticipates this momentum will continue, projecting AI sales to reach approximately $8.2 billion in the current quarter, representing a near doubling from the prior year.

Key metrics underscore the scale and visibility of this growth:
* Order Backlog: A committed AI order book spanning six quarters, valued at $73 billion
* Major Contracts: Includes $21 billion in orders from Anthropic and collaborations surrounding Google's Tensor Processing Units (TPUs)
* Annual Revenue: Total company revenue of approximately $64 billion, with over $20 billion now derived from AI products

These figures demonstrate that AI has become a core pillar of Broadcom's business, providing clear revenue visibility for the coming quarters.

Analyst Price Targets Revised Upward

In response to the strong fundamentals, several analysts have significantly raised their price targets. Benchmark analyst Cody Acree reaffirmed his "Buy" rating while lifting his target from $385 to $485 per share. He attributed the stock's recent decline primarily to profit-taking following a strong annual performance, rather than any deterioration in the company's underlying business health.

Similarly, UBS analyst Timothy Arcuri increased his price target to $475. Arcuri characterized the market's reaction following the latest earnings as a "significant overreaction." He highlighted the explosive growth in Broadcom's AI chip segment, which UBS estimates will exceed $60 billion in fiscal year 2026—a figure that would represent nearly a tripling from the previous year.

Should investors sell immediately? Or is it worth buying Broadcom?

Navigating Near-Term Headwinds

The stock's recent weakness has been partially linked to two specific factors: an insider transaction and margin guidance. A Broadcom insider recently sold shares worth approximately $12 million, a move that unsettled some retail investors.

Furthermore, management's outlook indicated that a higher mix of AI product sales could pressure gross margins in the short term. For the first quarter, Broadcom forecast a gross margin decline of roughly 100 basis points.

However, institutional analysts emphasize that overwhelming demand in the AI sector overshadows these temporary effects. The company's underlying profitability remains a key anchor; Broadcom reported a full-year EBITDA margin of 68%, a level more typical of software firms and one that stands out prominently within the hardware sector.

Long-Term Outlook Takes Precedence

Strategically, Broadcom is positioning itself as a primary beneficiary of the ongoing global build-out of AI infrastructure. With shares trading around $350, the new analyst targets of $475 and $485 suggest potential upside exceeding 35%.

The market's focus is consequently shifting away from short-term margin compression toward the long-term certainty provided by the $73 billion order backlog. In current trading, the stock is responding positively to the reaffirmed growth trajectory and upgraded price targets, reflecting renewed confidence in the company's strategic direction.