Broadcom Inc (NASDAQ:AVGO, XETRA:1YD) is drawing strong support from analysts following its latest earnings report, as the company’s expanding artificial intelligence (AI) business offsets concerns about margin pressures and a premium valuation.
Analysts at Bank of America noted the company’s AI backlog of $74 billion over the next six quarters, calling it “generally in line with bull case expectations, and management suggests that more could be added.”
Jefferies analysts noted that the AI backlog “should continue to expand over the next 18 months,” and projected that AI revenue could “more than double in 2026 and potentially double again in 2027.” The firm also highlighted that the company’s focus on AI continues to derisk near-term guidance, with significant opportunities for FY27 as new projects ramp up.
Analysts also addressed investor concerns about profitability, which drove the stock down over 10% on Friday morning. “Although gross margin pressure is a fair concern, we believe operating expenses can be maintained, keeping EBIT margins relatively steady despite higher tax rates and mix-driven margin pressure,” Bank of America wrote.
Bank of America analysts further suggested that Broadcom’s broadening customer base, including the addition of a potential fifth customer, could support long-term growth.
Jefferies also emphasized Broadcom’s strong AI momentum. “The expansion of the external TPU storyline continues with an $11 billion follow-on order from Anthropic for Q4 2026, and a fifth unnamed customer signed during the quarter, starting a multi-year custom XPU program,” they wrote.
Elsewhere, Baird highlighted the combination of AI and software strength at Broadcom, saying, “OpenAI-related revenue is expected to span throughout 2027-2029, and we continue to see low double-digit revenue growth for 2026 from software bookings.”
Analysts broadly agreed that Broadcom’s expanding AI customer base and strong backlog could offset near-term margin pressures. “The company’s order visibility continues to build, and management commentary suggests that $50 billion to $100 billion in AI sales is possible in FY26/27, in line with bull-case expectations,” Bank of America noted.
While some investors remain cautious due to Broadcom’s premium valuation compared with peers such as Nvidia, the company’s accelerating customer traction and robust AI pipeline have analysts confident in continued growth.