HSBC analysts are recommending investors buy Broadcom stock after a recent pullback, maintaining a Buy rating despite trimming the target price to $450 from $535. The bank sees about 41% upside from current levels as valuation resets create opportunities in AI semiconductor stocks. Analyst Frank Lee argues the sector could see another strong year ahead.

For the upcoming first quarter of fiscal 2026, HSBC expects Broadcom to report $19.5 billion in revenue, slightly above management's $19.1 billion guidance. The bank forecasts second-quarter revenue of $21 billion, 3% above consensus estimates. While AI momentum remains firm, Lee anticipates more dramatic growth will materialize in the second half of FY26.

HSBC's bullish outlook centers on Broadcom's custom chip business and AI networking potential. The bank's ASIC forecasts for FY26 and FY27 remain 13% and 12% above Street estimates, respectively. With management disclosing a $20 billion AI networking backlog, HSBC is raising its revenue projections to $17 billion for FY26 and $30 billion for FY27 - 43% and 64% above consensus. In the most optimistic scenario, this could drive 16-17% upside to earnings per share.