Broadcom's AI Surge Fuels Projection of Quadrupled Earnings by 2027

Bernstein analyst sees Broadcom's stock as compelling, forecasting EPS to surge from $5.12 to over $20 by 2027, fueled by booming AI revenue and strategic partnerships.

A prominent market analyst has doubled down on a bullish stance for semiconductor giant Broadcom, labeling its current valuation as exceptionally compelling. Bernstein research analyst Stacy Rasgon points to a staggering forecast: the company's earnings per share are projected to climb from a recent $5.12 to surpass $20 by fiscal year 2027. This trajectory implies growth of nearly 400% within a two-year span.

Robust Quarterly Performance Sets the Stage

The foundation for this optimism is Broadcom's powerful start to fiscal 2026. The company reported first-quarter total revenue of $19.31 billion, marking a 29.5% year-over-year increase. This surge was predominantly driven by the artificial intelligence segment, which saw its sales double to reach $8.4 billion.

Given the earnings forecast for 2027, Broadcom shares are currently trading at approximately 16 times those future profits. This multiple appears moderate, especially when contrasted with a trailing price-to-earnings ratio of around 60 based on the last twelve months. The positive outlook is shared by other firms, including Cantor Fitzgerald and Rosenblatt, which have issued price targets of $525 and $500, respectively.

Strategic Partnerships and Product Pipeline

Broadcom's growth narrative is bolstered by substantial, long-term agreements with major technology players. The company is the design partner for Google's TPU "Ironwood" and has secured orders from Anthropic valued at approximately $21 billion. These contracts envision the deployment of one million TPU chips by the end of 2026. Management has indicated that visibility for fiscal 2027 has improved significantly, with AI-related revenue potentially exceeding the $100 billion mark.

On the product front, Broadcom is in serial production of its Tomahawk 6 switch ASIC, capable of 102.4 Tbps and designed for high-performance AI data centers. This is complemented by the new Taurus BCM83640 chip for 1.6-terabit data modules and the Symantec CBX cybersecurity platform, which integrates Carbon Black XDR technologies with AI-powered threat detection.

Navigating Minor Headwinds

While the focus remains firmly on AI-driven growth, the company faces some challenges. The European Commission has filed an antitrust complaint concerning VMware licensing practices, and corporate insiders have sold shares worth $177 million over the past 90 days. However, these factors have done little to dampen the overarching bullish sentiment centered on the AI business.

For the second quarter of fiscal 2026, Broadcom anticipates revenue in the range of $21 to $22 billion. The stock recently traded ex-dividend for its quarterly cash dividend of $0.65 per share, with payment scheduled for the end of March. Currently, the share price sits roughly 21% below its December peak of €353.15. Based on the substantial earnings expectations for 2027, this pullback may represent the attractive entry point that analyst Rasgon has identified.