Broadcom stock soars 5% on Q1 beat: but how high can AVGO go?

Broadcom stock (NASDAQ: AVGO) shot up about 5% Thursday after the chip giant crushed first-quarter expectations, delivering revenue and earnings that left Wall Street scrambling to catch up.

The beat wasn't just good as it validated Broadcom's bet on AI infrastructure and networking at a time when investors have been picky about semis.

Multiple analysts wasted no time hiking price targets post-earnings. So is this a one-day pop on a hot print, or the kickoff to a bigger re-rating for the stock?

Broadcom's massive Q1 beat

Numbers tell the story clean and fast.

Broadcom posted $19.31 billion in revenue for its fiscal first quarter, topping the $19.21 billion Street call by a solid margin and up 29% from last year.

Adjusted EPS came in at $2.05, slightly above the $2.03 Wall Street estimate.

AI semiconductors stole the show at $8.4 billion, more than doubling year over year as demand for custom accelerators and networking chips surged.

CEO Hock Tan didn't hold back on the call.

He called out AI networking revenue jumping 60%, now one-third of the AI total, with hyperscalers like Meta and Google scaling their custom XPUs, which are specialized AI processors Broadcom designs just for them.

Infrastructure software chipped in $6.8 billion, steady at 1% growth, while overall adjusted EBITDA margins hit a record 68%.

Tan sees AI chip sales climbing to $10.7 billion next quarter alone.

Guidance sealed the conviction. Broadcom pegged Q2 revenue at $22 billion, a 47% growth and way ahead of the $20.4 billion forecast.

That's not tinkering around the edges; it's the company doubling down on a data center buildout where its chips connect the GPUs and handle the flood of AI traffic.

Gross margins held firm at 77%, proving Broadcom can grow fast without sacrificing profitability. Investors heard execution, not excuses.

Buy Broadcom shares instantly on eToro now

Broadcom stock: How much upside is left?

Wall Street's reaction came quickly.

Consensus stays a strong Buy, and fresh notes from firms like KeyBanc and others pushed average price targets higher, some now implying 20% plus upside from here.

Analysts love Broadcom's positioning: it's not just riding Nvidia's coattails but building the plumbing, networking ASICs and optical chips that makes AI clusters work at scale.

Add VMware's software recurring revenue and aggressive buybacks, and you've got a growth machine with cash return baked in.

Skeptics aren't sold completely. The stock's valuation stretched after a huge run, trading at a premium that leaves little margin for error.

AI growth ties heavily to a handful of big cloud customers; if their capex pauses, Broadcom feels it first.

Non-AI segments stayed flat, a reminder that semis can turn cyclical when the hype cools. One analyst noted the bar just got higher: Q2 has to deliver, or this rally risks fading.

The next couple of quarters will test if Broadcom can keep printing numbers like these.

Fresh targets signal more room to climb, but the market's watching that AI pipeline closely, because a beat this big means expectations don't come down anytime soon.