Broadcom (AVGO) Surges to Record High — TipRanks AI ‘Spark’ Rates It Outperform Before Earnings

Broadcom Inc. (AVGO) is having a moment. The stock has climbed to new highs, surging 3.27% ahead of its June 5 earnings report, as investors cheer both the momentum in artificial intelligence and the company’s latest innovations in networking hardware. But beyond market hype, TipRanks’ AI Analyst ‘Spark’ offers a grounded view: Broadcom earns a strong score of 75, rated Outperform, signaling confidence in its strategic direction, earnings power, and long-term relevance in the tech landscape.

AI Delivers the Goods

Spark’s view blends robust fundamentals with clear sector leadership. Broadcom’s revenue reached a record $14.9 billion last quarter, up 25% year-over-year. That growth was fueled by a sharp rise in AI demand, with AI-related revenue hitting $4.1 billion, a 77% jump from the previous year. The company expects that figure to grow again to $4.4 billion in the upcoming quarter. Spark highlights this transformation as a sign of Broadcom’s successful pivot toward high-growth, next-gen technologies.

While many semiconductor firms chase performance cycles, Broadcom is building an infrastructure moat. Its dual-engine business model, spanning Semiconductor Solutions and Infrastructure Software, gives it resilience and reach. Spark notes that the software segment, powered by VMware and other enterprise tools, grew 47% in the last quarter. This shift to software subscriptions helps stabilize revenues and positions the company to serve both cloud giants and legacy enterprises on a larger scale.

The numbers behind the AI optimism also stand firm. Spark points to Broadcom’s EBITDA margin of 66% and a healthy free cash flow profile, with cash flow from operations exceeding $21 billion over the past year. Even with a high valuation, a P/E ratio of 116.8, the company’s growth trajectory and efficient capital deployment help justify the premium.

_{AI and Software Drive a Structural Shift in Broadcom’s Revenue Mix. Source: Main Street Data}

Short-Term Risks, Long-Term Confidence

Risk remains part of the picture. Spark flags ongoing weakness in non-AI semiconductors, where segments such as wireless and industrial have yet to rebound fully. There’s also rising competition from customers like Apple (AAPL), which is exploring in-house chip development. However, in Spark’s assessment, Broadcom’s scale, leadership in networking and custom AI silicon, and aggressive R&D push tip the balance firmly in favor.

This week’s rally was also sourced by the news that Broadcom began shipping its Tomahawk 6 chips, aimed at boosting AI data center performance. While Spark sees the product as a positive step, it is Broadcom’s broader execution that underpins its bullish score, not just one chip launch.

As the company prepares to announce earnings on June 5, Wall Street is looking for $1.57 in EPS on nearly $15 billion in revenue. For Spark, the signals are clear: Broadcom is more than a momentary play on AI. It’s a key part of the digital tools driving future innovations.

Is Broadcom a Buy Stock?

The Street’s analysts view Broadcom as a Strong Buy, with an average stock price target for AVGO stock of $255.79. This implies a 1.54% downside.

See more AVGO analyst ratings