Broadcom Inc. (AVGO) is about to report earnings, and the stakes are high. The semiconductor giant's artificial intelligence business has been accelerating, and investors are eager to see whether management can maintain the momentum with fiscal 2026 revenue guidance and gross margin trends that justify the recent hype.
Goldman Sachs analyst James Schneider maintained a Buy rating on Broadcom and raised his price forecast from $380 to $435, signaling confidence that the company's AI story still has room to run.
According to Schneider, the upcoming results will revolve around three core questions: What's the fiscal 2026 AI revenue guidance? How much are Alphabet Inc. (GOOGL) Google and OpenAI contributing? And where are gross margins headed as the custom XPU mix continues climbing?
Expectations Are Already Sky-High
Here's the thing about going into earnings with elevated expectations—you need to clear a higher bar. Schneider notes that investors are already positioned optimistically, buoyed by strong industry results and momentum from major customers, especially Google following its Gemini 3 launch.
The analyst believes Broadcom will raise its fiscal 2026 AI revenue guidance above the previous forecast of 100% year-over-year growth. He also expects management to offer more granular details on the revenue breakdown between custom XPU and Networking, plus clarification on OpenAI's contribution to the growth story.
Investor sentiment has been bolstered by solid performance from peers like Nvidia Corp. (NVDA) and encouraging demand signals from Google. Spending levels from hyperscale customers keep accelerating, and Goldman projects that AI strength will persist through the fourth quarter. The firm anticipates fiscal 2026 first-quarter guidance above consensus, driven by substantial customer investment.
Schneider's forecasts are ambitious: he sees Broadcom's fiscal 2026 AI revenue reaching $45.4 billion and fiscal 2027 hitting $77.3 billion, which translates to annual growth of 128% and 70%, respectively.
The Three Variables That Could Swing the Stock
Schneider identifies three major factors likely to drive Broadcom's stock reaction when earnings drop.
First up: whether the company raises its fiscal 2026 AI revenue guidance. Given the strong signals from Google and Nvidia, the market is practically expecting this, so the real question is by how much.
Second: How much are Google and OpenAI expected to contribute to fiscal 2026 revenue? Investors will scrutinize Google's incremental spending trends closely, and they'll want to understand OpenAI's role in shaping the revenue outlook. These customer-specific datapoints matter because they offer visibility into the sustainability of Broadcom's AI growth.
Third: What's happening with fiscal 2026 gross margin progression? Broadcom's custom XPU business is growing fast—projected to climb more than 160% year over year. That's great for revenue, but rapid growth in lower-margin products creates near-term margin dilution, which could concern some investors.
What Could Move the Stock in the Near Term
Since the market already anticipates an AI revenue guidance bump, Schneider says the real stock-moving catalysts will likely come from fresh datapoints on customer spending, new design wins, and upside in AI Networking.
He sees additional growth opportunities in networking, driven by Broadcom's Tomahawk 6 rollout and the broader expansion of AI infrastructure. These networking products could provide another growth vector beyond custom chips.
Schneider raised his fiscal 2026 and fiscal 2027 EPS estimates by approximately 14%. He also introduced fiscal 2028, 2029, and 2030 EPS forecasts of $17.35, $20.00, and $22.40, respectively, reflecting his long-term confidence in the company's earnings trajectory.
Price Action: AVGO stock was trading higher by 1.48% to $390.74 at last check Wednesday.
