This article first appeared on GuruFocus.
Broadcom (NASDAQ:AVGO) is heading into its earnings report with expectations running high, though recent trading patterns suggest strong results alone may not be enough to shift the stock’s recent trajectory. Shares have fallen about 23% from a December record, trailing the S&P 500 as investors rotate away from some of the largest technology companies amid concerns about the sustainability of massive spending tied to artificial intelligence infrastructure. Even so, the company remains positioned near the center of that spending cycle as a chip partner to companies such as Alphabet and other hyperscale AI developers.
Wall Street forecasts suggest Broadcom could still deliver robust near-term growth. Analysts expect fiscal first-quarter adjusted earnings per share to rise about 27% year over year to roughly $2.03, while revenue is projected to increase around 29% to about $19.3 billion. AI-related sales are expected to approach $8.2 billion, nearly doubling from the prior year as demand for custom AI accelerators continues to build. Some investors are also watching whether the company provides encouraging guidance, particularly given the heavy capital spending plans from hyperscale customers supporting AI infrastructure.
Still, the market’s recent reactions to semiconductor earnings have introduced a degree of caution. Broadcom shares dropped more than 11% following its previous earnings report after the company disclosed a $73 billion backlog for AI products across the next six quarters that did not meet some expectations. Investors are likely to focus on any update to that backlog, along with progress on tensor processing unit chips being built for Google, where orders are expected to ramp up in the second half of the year. Commentary on potential developments with companies such as OpenAI could also draw attention as investors assess the durability of Broadcom’s role in the evolving AI ecosystem.
