Citi has increased its target price for Broadcom to $500 per share and maintained a Buy rating, identifying the company as its preferred semiconductor investment for 2026. The move comes ahead of Broadcom's fiscal second-quarter earnings, which the company is scheduled to report on June 3.
In its note, the bank said it now models both the April-quarter and the July-quarter sales and earnings per share modestly above consensus, attributing the improvement to stronger artificial intelligence-related demand.
Citi provided a multi-year view on Broadcom's AI exposure, estimating that AI-related revenue will expand from about 49% of total sales at present to roughly 81% by the fiscal fourth-quarter of 2028. The bank also set out projections for AI spending across the market, forecasting combined Google and Anthropic AI sales of about $80 billion and total AI sales reaching $115 billion in 2027, increasing to $180 billion in 2028.
The $500 price target is anchored to a 20 times multiple applied to Citi's fiscal 2028 earnings-per-share estimate of $25. The bank said it rolled the valuation forward from its prior fiscal 2027 base, citing what it described as increased earnings visibility as the rationale for the shift.
On customer relationships, Citi highlighted Broadcom's current engagements with major AI customers, naming Google, Meta, Anthropic, and OpenAI, plus two additional unnamed clients. The note added that Broadcom is reportedly working with three more customers on custom AI chip development.
Addressing concerns about Broadcom's enterprise software segment, Citi characterized those worries as overblown. The bank described the software business as "very sticky," pointing to deep integration within large enterprise customers as a factor supporting revenue durability.
With competitive risk under scrutiny, Citi flagged a five-year long-term agreement with Google as a meaningful mitigant, saying such an arrangement should ease fears that rivals could rapidly develop alternative chips. The bank argued that it would be difficult for competitors to catch up technologically in the near term.
The analyst commentary comes as investors await Broadcom's next earnings release and consider the company's positioning in the fast-growing AI market. Citi's projections and valuation approach reflect the bank's view that AI demand is set to materially increase Broadcom's share of revenue over the coming years.