HSBC recommends buying this AI chip stock on dips.

LootboxPhobia · 2026-03-04T00:45:18+00:00

HSBC recommends investors seize the recent pullback in Broadcom's stock price, believing that the valuation reset of AI concept stocks has created opportunities for the semiconductor industry. Analysts forecast that Broadcom's first-quarter revenue slightly exceeded guidance, with more significant growth expected in the second half of fiscal year 2026. AI networks are expected to become the main catalyst driving profit growth.

LootboxPhobia

2026-03-04 00:45:18

Abstract generation in progress

Investing.com - HSBC urges investors to take advantage of recent pullbacks in a major chip stock, believing that the valuation reset of AI concept stocks has created opportunities for this semiconductor group, which is expected to perform strongly again this year.

Use InvestingPro professional tools to track every analyst rating change in real-time.

Analyst Frank Lee stated that HSBC maintains a buy rating on Broadcom, with a target price lowered from $535 to $450, noting that the stock still has about 41% upside from current levels.

HSBC expects Broadcom’s upcoming fiscal first-quarter results for 2026 to slightly exceed guidance, with revenue forecasted at $19.5 billion, compared to management’s estimate of $19.1 billion.

For the second quarter, Lee expects revenue to reach $21 billion, 3% above market consensus, and added that while AI-driven growth remains strong, a “more significant growth trajectory” will emerge in the second half of fiscal 2026.

A key pillar of HSBC’s outlook is Broadcom’s custom chip business. The bank stated, “Market forecasts for ASIC in fiscal 2026 are catching up to our estimates,” after Broadcom’s last quarterly update, which saw Wall Street raise its forecast by 25%.

HSBC’s own forecasts for ASIC in fiscal 2026 and 2027 are 13% and 12% higher than market consensus, respectively.

The bank also believes AI networks will become the next major catalyst. HSBC highlighted management’s disclosure of $20 billion in backlog orders and said it is currently revising its revenue forecasts for AI networks in fiscal 2026 and 2027 to $17 billion and $30 billion, “representing 43% and 64% above Wall Street expectations.”

In HSBC’s most optimistic scenario, this could drive “EPS further up by 16%/17%.”

“We believe that strong ASIC growth and upside potential in AI network revenue can help Broadcom revalue to our target P/E ratio,” Lee concluded.

This article was translated with the assistance of artificial intelligence. For more information, please see our Terms of Use.

View Original

This page may contain third-party content, which is provided for information purposes only (not representations/warranties) and should not be considered as an endorsement of its views by Gate, nor as financial or professional advice. See Disclaimer for details.

1 Likes