Broadcom's price needs roughly $15 a share of earnings by fiscal 2027. We forecast $15 in fiscal 2027 and $23 in fiscal 2028, with management's AI plan cut by about 20%. At 23 times that gives $436, up 16%.
Key points
- $34.8 billion is guided revenue for the quarter ending November 1, 2026, up from $15.0 billion a year earlier in the May quarter.
- $436 is our 12-month target, 23 times blended fiscal 2027 and 2028 earnings of $18.95 a share. That is 16% above the price.
- $127 billion of purchase commitments and $29 billion of lease backstops (Broadcom's promise to cover customers' rack leases) are the risk if AI customers stall.
The call
The price already requires the AI boom to hold through 2027. At $376.51, Broadcom trades near 25 times its guided fourth-quarter run rate of about $15 a share. Growth must continue, and margins must stay above 60%.
Quarterly revenue ($ billions), reported and Q4 guideSource: SEC XBRL filings; Q4 FY26E is company guidance of Sept 2, 2026
We think the market is slightly too cautious. Management points to $115 billion of AI revenue in fiscal 2027 and says supply is secured. We assume only $95 billion, then $170 billion in fiscal 2028. That still lifts earnings per share from about $15 to about $23.
Valuation
| Item | Estimate |
|---|
| Fiscal 2027 revenue (AI $95B, rest $52.5B) | $147.5 billion |
| Operating margin | 62% |
| Fiscal 2027 / 2028 EPS (our forecast) | $15.03 / $22.87 |
| Blended earnings, 12 months out | $18.95 a share |
| Multiple | 23 times |
| Target | $435.84 |
Twenty-three times is below today's roughly 25 times on the run rate, because growth slows and customer concentration is high. If AI revenue only reaches $75 billion, fiscal 2027 earnings fall to about $12.50 and the stock likely drops. The upside is moderately larger than the downside, which supports a buy and not a strong buy.
Risks
- Customer financing fails: watch the reported $50 billion to $60 billion Anthropic and OpenAI financing deals and any convertible notes Broadcom issues.
- Concentration and policy: one distributor was 50% of revenue, and China is reportedly reviewing Broadcom switches. Watch the December 9 report.
- Gross margin dilution from memory-heavy accelerators, and software revenue pulled forward by upfront recognition. Watch the 73% gross margin guide.
What would change my mind
A fiscal 2027 AI revenue outlook cut below $85 billion, or a customer funding failure, would move us to hold or sell.