Investor Confidence Carries Broadcom Rally Toward 2026 Despite Bubble Concerns

Broadcom will unveil its fiscal fourth-quarter results after Thursday’s market close, with traders bracing for sharp price swings. Options markets are pricing in volatility of up to 6%, implying shares could surge to $425—well above Monday’s record intraday peak of $407—or retreat to $377.

The semiconductor giant has already shattered multiple records this year, propelled by booming demand for its AI chips powering Alphabet, Meta Platforms, and OpenAI.

Investor Optimism Meets Earnings Anticipation

Expectations for Broadcom’s performance remain robust. Revenue is projected to climb 24% year-over-year to $17.48 billion, while adjusted earnings per share are forecast at $1.88, up from $1.42 a year earlier. Analysts tracked by Visible Alpha are unanimously bullish: all 12 rate the stock a “buy,” with an average price target of $432.02.

This enthusiasm reflects a broader market mood. More than 60% of retail investors currently describe themselves as optimistic or cautiously optimistic, despite lingering concerns about bubbles and inflation. Even after a late-November selloff in mega-cap names such as Nvidia, Amazon, and Palantir, retail traders rushed to “buy the dip,” with Schwab’s Trading Activity Index (STAX) recording one of the fastest accumulation paces in history.

Bubble Concerns, Confidence Endures

Despite widespread acknowledgment of froth in AI and crypto markets—65% of investors believe AI stocks are overvalued, and more than half view cryptocurrencies as “frothy”—capital continues to flow into the sector’s biggest players. Broadcom, often grouped with the “Magnificent 8,” has rallied alongside Nvidia as enthusiasm for AI accelerates.

The year has been marked by headline risks: tariff policies under the Trump administration, the emergence of China’s DeepSeek AI model, and geopolitical instability in the Middle East and Ukraine. Yet investors have largely stayed invested, placing more trust in market momentum than in policy shifts. Inflation remains their top concern, but most expect annualized returns of at least 5% over the next three years, underscoring resilience in sentiment.

Risks on the Horizon

Even amid strong momentum, analysts warn of long-term challenges. Bank of America and Morgan Stanley highlight potential risks from Google, which is reportedly developing its own AI chip designs. If commercialized, these in-house chips could reduce reliance on Broadcom and erode its market share. The possibility underscores the fierce competition in AI hardware, where demand is soaring but rivalries are intensifying.

A Pivotal Earnings Moment

Broadcom’s upcoming report arrives at a critical juncture: record highs, strong investor optimism, and persistent bubble concerns. Traders anticipate volatility, but the prevailing sentiment suggests confidence in Broadcom’s ability to ride the AI wave. For investors emboldened by recent dips and undeterred by geopolitical or policy risks, Broadcom remains central to the bullish narrative propelling markets into 2026.