Broadcom's (AVGO) fiscal Q2 results and Q3 guidance only modestly exceeded Street expectations, but its AI growth remains on track for about 180% year-over-year in fiscal 2026 and almost 100% in fiscal 2027, BofA Securities said in a note Thursday.

Broadcom's visibility in its AI compute program now extends into 2028, with multiple new customers, including Amazon-backed (AMZN) Anthropic, Meta (META), and Open AI expected to ramp purchase agreements over the next few years, according to the note.

The company's Software growth outlook of over 30% in fiscal Q3 suggests there are multiple growth vectors within the AI theme, the brokerage said, adding it expects earnings per share to exceed $30 by calendar year 2030, implying a compound annual EPS growth rate of about 40% between 2025 and 2030.

However, BofA flagged gross margin pressure as the custom chip mix continues to increase, noting that Broadcom is facing higher competition as clients diversify their suppliers and move away from exclusivity.

BofA Securities kept a buy rating on Broadcom and raised the price target to $530 from $450.

Shares of Broadcom were down 15% in Thursday trading.

Price: 407.18, Change: -72.05, Percent Change: -15.03