Citi names Broadcom stock top semiconductor pick for 2026

The AI spot contention has produced a fistful of wide winners. Broadcom is 1 of them. But the question heading into its adjacent net study is nary longer astir whether it is simply a apical AI banal to own.

The existent statement present is: Can a institution already pulling successful billions from artificial quality support increasing accelerated capable to warrant its lofty valuation?

At slightest 1 large Wall Street steadfast thinks the reply is yes, and it is putting that presumption connected grounds earlier Broadcom reports adjacent month.

Why Broadcom is simply a apical spot stock

To recognize wherefore Citi's telephone carries weight, you archetypal request to recognize what Broadcom (AVGO) does successful the AI world.

Broadcom designs customized AI chips called XPUs, abbreviated for accelerator processing units, tailored specifically for each of its six large customers. Think Google, Meta, and present OpenAI.

These chips are built from the crushed up to tally each company's circumstantial AI workloads acold much efficiently than off-the-shelf processors can.

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Beyond chips, Broadcom besides supplies the networking silicon that connects thousands of these processors wrong monolithic AI information centers.

That operation makes Broadcom profoundly embedded successful however the world's biggest exertion companies physique their AI infrastructure.

In its fiscal archetypal 4th of 2026 (ended successful January):

• Total gross roseate by 29% twelvemonth implicit twelvemonth to grounds $19.3 billion.

• AI semiconductor gross much than doubled twelvemonth implicit twelvemonth to $8.4 billion.

• Adjusted net earlier interest, taxes, depreciation, and amortization, oregon EBITDA, totaled $13.1 billion, indicating a borderline of 68%.

These numbers bespeak a concern that six of the world's astir important exertion firms beryllium connected to powerfulness their AI ambitions.

Citi makes a determination earlier June 3 earnings

Citi expert Atif Malik raised his terms people connected Broadcom from $475 to $500 connected May 12, keeping his Buy standing successful spot and naming the banal his apical semiconductor prime for 2026.

Broadcom reports its fiscal 2nd 4th results connected June 3, and Malik went connected the grounds earlier the announcement.

Malik estimates AI gross volition turn from astir fractional of Broadcom's full income contiguous to astir 81% of the concern by precocious fiscal 2028.

Related: Goldman Sachs resets Broadcom banal forecast

He projects full AI income of $115 cardinal successful 2027, rising to $180 cardinal successful 2028.

CEO Hock Tan has himself pointed to much than $100 cardinal successful AI spot gross successful 2027 arsenic a realistic target.

During the net call, Tan stated: