---
title: "Bank of America Securities raises Broadcom's target price to $500 and upgrades earnings forecast"
description: "Bank of America Securities reiterated Broadcom as its top pick and assigned a \"Buy\" rating, raising its earnings per share forecasts for fiscal years 2026 and 2027 to $10.33 and $14.4, respectively, w"
type: "news"
locale: "en"
url: "https://longbridge.com/en/news/269667610.md"
published_at: "2025-12-15T04:56:46.000Z"
---

# Bank of America Securities raises Broadcom's target price to $500 and upgrades earnings forecast

> Bank of America Securities reiterated Broadcom as its top pick and assigned a "Buy" rating, raising its earnings per share forecasts for fiscal years 2026 and 2027 to $10.33 and $14.4, respectively, with a target price increased from $460 to $500. Despite facing pressure on tax rates and gross margins, Broadcom's AI backlog continues to grow, with management expecting AI sales to reach $50 billion and $100 billion in fiscal years 2026 and 2027. Bank of America Securities believes that Broadcom's new fifth customer may be Apple Inc. and has lowered its gross margin estimates for Broadcom for fiscal years 2026 and 2027 to 73% and 71%

Bank of America Securities reiterated Broadcom (AVGO.US) as a preferred stock with a "Buy" rating, raising the earnings per share forecasts for fiscal years 2026 and 2027 by 8% each (despite facing higher tax rates and gross margin pressure from its product mix), to $10.33 and $14.4, respectively. The target price was raised from $460 to $500, based on an unchanged 33 times the forecasted price-to-earnings ratio for fiscal year 2027.

Bank of America Securities believes that Broadcom's stock price fell in after-hours trading following the earnings announcement, possibly due to some unnecessary concerns: 1) The gap between backlog orders and the most optimistic expectations: $73 billion (and continuing to grow) in AI backlog orders, compared to the market consensus of $69 billion (over the next six quarters), and some possibly exceeding $80 billion in the most optimistic expectations. Broadcom's backlog/order visibility continues to build, and management's comments suggest that achieving $50 billion and $100 billion in AI sales in fiscal years 2026 and 2027 is possible, aligning with the most optimistic pre-call estimates; 2) The launch date of the OpenAI project: The firm still expects its contribution to fiscal year 2027 to be greater than that of fiscal year 2026, which is a good thing from a certain perspective, as it reduces the risk of the AI outlook for fiscal year 2026. In the firm's view, Broadcom's new fifth customer could be Apple (AAPL.US), considering Apple is a traditional customer and has signed long-term large-scale deployment agreements; 3) Gross margin pressure from the product mix: This is a reasonable concern, and the firm has lowered Broadcom's gross margin estimates for fiscal years 2026 and 2027 to 73% and 71% (previously 75.4% and 73.6%), but the firm believes that Broadcom's operating expenses can be controlled to keep the EBITDA margin relatively stable; and 4) Premium valuation relative to NVIDIA (NVDA.US): Compared to NVIDIA's 24 times, Broadcom's forecasted price-to-earnings ratio for fiscal year 2026 is 33 times, the largest gap historically, and this gap tends to seasonally converge in the first quarter of the calendar year

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> **Disclaimer**: This article is for reference only and does not constitute any investment advice.