03:14 PM EST, 02/26/2025 (MT Newswires) -- Broadcom's ( AVGO ) fiscal Q1 results and Q2 guidance are poised for upside, driven by strength in AI application-specific integrated circuits and networking, Oppenheimer said in an earnings preview Wednesday.

The firm highlighted Broadcom's ( AVGO ) AI growth momentum, driven by its AI ASIC and networking businesses, which together account for roughly 25% of revenue. Oppenheimer reiterated Broadcom's ( AVGO ) position as the No. 2 AI semiconductor franchise after Nvidia (NVDA), citing expansion across hyperscalers and expected contributions from new AI projects

Broadcom's ( AVGO ) core businesses in networking, wireless, broadband, server/storage, and software continue to provide sustainable growth and cash return, the firm added.

Ahead of Broadcom's ( AVGO ) fiscal Q1 earnings release on March 6, Oppenheimer forecasts gross margins to rise 100 basis points sequentially to 77.9%, modeling free cash flow of $7.5 billion for the quarter. The firm also sees an upside from the company's VMware unit's new pricing model, projected to drive over $16 billion in revenue this year.

Oppenheimer reiterated its outperform rating and $225 price target on Broadcom ( AVGO ).

Broadcom ( AVGO ) shares were up 4% in recent trading.

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