Chip giant Broadcom (AVGO.US) is scheduled to report its fiscal first-quarter 2026 results after the market closes on Wednesday. In a recent research report, JPMorgan stated that it anticipates robust demand for TPUs and strong AI networking business will drive Broadcom's revenue, profit, and free cash flow for the first quarter to exceed both the bank's and market consensus expectations, leading to an upward revision of its guidance. The firm reaffirmed its "Overweight" rating on Broadcom, with a December 2026 price target of $475, implying a potential upside of nearly 49% from Monday's closing price of $318.82.

Strong TPU and AI Networking Business Expected to Drive Q1 Beat and Upbeat Q2 Guidance JPMorgan indicated it continues to see robust demand for Broadcom's AI products, primarily fueled by increasing demand for Google's TPUs and strength in the AI networking business. The non-AI semiconductor segments (enterprise, server/storage, broadband) are expected to continue a gradual improvement, while revenue synergies from VMware are projected to persist.

For the first quarter, JPMorgan forecasts the company's total revenue will surpass $20 billion, with AI-related revenue exceeding $9 billion, compared to a market consensus of $8.1 billion. The bank also expects Broadcom's second-quarter revenue guidance to be above market expectations. It projects Q2 revenue to be in the range of $21 billion to $22 billion or higher, with AI revenue between $10 billion and $11 billion or more, against a consensus of $8.96 billion, alongside continued gradual improvement in non-AI semiconductor businesses.

The strength in the AI business is primarily driven by strong AI networking demand, continued ramp of the 3nm Ironwood TPU project, progress on Meta's MTIA and ByteDance's ASIC projects, as well as initial shipments for OpenAI and SoftBank/Arm's first-generation ASIC XPU projects.

Strong AI Business Growth Prospects - Fiscal 2027 AI Revenue Projected to Exceed $120 Billion JPMorgan noted that while Meta is moderating the timeline for its future-generation XPU ASIC roadmap in the medium term, other Broadcom ASIC customers are accelerating their plans. Diversification among AI XPU customers is expected to mitigate the impact of any single customer's slowdown.

The bank estimates Broadcom's fiscal 2026 AI revenue (ASIC + networking) will be approximately $65 billion or more, led by its core TPU customer, and supported by volume increases from the OpenAI and SoftBank/Arm first-gen XPU ASIC projects, incremental contributions from other AI ASIC customers like Meta and ByteDance, and persistently strong AI networking revenue.

For calendar year 2027, JPMorgan believes the majority of TPU shipments (Ironwood and Sunfish) will support external customer AI workloads, all driven by Broadcom/Google's next-generation 3nm TPU ASIC. The firm anticipates Anthropic and OpenAI will contribute tens of billions of dollars in revenue to Broadcom in 2027, with ByteDance and Meta also providing ongoing contributions.

Regarding Meta, JPMorgan stated that while there are some changes to its future-generation projects (2nm Olympus, targeting a 2028 ramp), it continues to expect current-generation projects (Athena, Iris, Arke) to contribute $5-6 billion in ASIC revenue this year and next, with Meta's overall commitment to ASICs and Broadcom remaining high.

Broadcom's diverse ASIC customer base—including Google, OpenAI, Anthropic, SoftBank/Arm, Meta, ByteDance, Alibaba, Baidu, Sambanova, xAI, Apple, among others—coupled with the ongoing prospect of tight supply and demand, will mitigate the risk of growth slowdown from any single customer. This diversification is a hallmark of the ASIC business model, reducing risk through varied clients and projects.

As evidence of this AI customer diversification, JPMorgan estimates the share of Broadcom's total AI revenue from Google's TPU business will decline from 60% in fiscal 2025 and 50-52% in fiscal 2026 to less than 45% in fiscal 2027. This decline occurs even as total AI revenue grows to over $120 billion by fiscal 2027.

Conclusion Overall, JPMorgan views Broadcom as a leader in wireless, data center networking, AI/deep learning ASICs, storage and infrastructure silicon, hardware, and software, positioning it to benefit broadly from positive trends in these end markets. Broadcom is a powerhouse in technology infrastructure, with unparalleled scale and technological capabilities that solidify its leadership across multiple markets.

Broadcom remains JPMorgan's top pick among covered semiconductor stocks due to its leading exposure to AI infrastructure spending (as the world's second-largest AI semiconductor supplier, top supplier of custom AI ASICs, and leading supplier of cloud/AI networking switch and routing chips), diversified end-market exposure, and industry-leading gross, operating, and free cash flow margins.

JPMorgan's December 2026 price target for Broadcom implies a forward P/E multiple of approximately 32x, which is broadly consistent with its AI peers' range of 30-35x, considering its industry-leading operating/free cash flow margins, diversified business, and leadership in AI ASICs and networking.