TLDR
- Broadcom reported Q2 revenue of $15 billion, beating Wall Street’s $14.96 billion estimate, with adjusted earnings of $1.58 per share versus $1.57 expected
- Stock fell 3-4% despite the earnings beat as investors had higher expectations for the AI chip maker
- CEO predicts AI chip demand acceleration in second half of 2026 driven by strong inference demand
- Multiple analysts maintain bullish ratings with price targets ranging from $210 to $310, citing AI growth potential
- Company guided Q3 revenue to $15.8 billion, slightly above analyst expectations of $15.75 billion
Broadcom stock dropped 3% Thursday evening and continued falling over 4% in Friday pre-market trading despite posting better-than-expected second quarter results. The semiconductor company beat revenue and earnings estimates but failed to impress investors who had set high expectations.
The AI chip maker reported fiscal second quarter revenue of $15 billion. This topped Wall Street’s consensus estimate of $14.96 billion according to FactSet data.
Adjusted earnings came in at $1.58 per share. Analysts had expected $1.57 per share for the quarter.
$AVGO | Broadcom is -1.1% after-hours.
🔹 EPS: $1.58 vs. $1.57 est. ✅
🔹 Revenue: $15.00B vs. $14.96B est. ✅Key takeaways:
🔸 Semiconductor revenue: +17% YoY
🔸 Infrastructure revenue: +25% YoY
🔸 AI revenue: +46% YoY
🔸 Q3 revenue outlook: $15.8B (+21% YoY) pic.twitter.com/IBfA6DmmAr— CMG Venture Group (@CmgVenture) June 5, 2025
The company’s semiconductor solutions segment generated $8.4 billion in revenue. The infrastructure software segment brought in $6.6 billion during the quarter.
For the current quarter, Broadcom guided revenue to $15.8 billion. Analysts had expected $15.75 billion in third quarter revenue.
AI Demand Expected to Accelerate
During the earnings call, CEO Hock Tan shared his outlook for AI chip demand. He said demand may accelerate during the second half of 2026 due to strong inference demand.
Inference refers to the process of generating answers from AI models. This represents a key growth area for the company’s custom AI chip business.
Broadcom competes in networking, broadband, server storage, wireless and industrial semiconductor markets. The company leads in high-end AI application-specific integrated circuits or ASICs.
These custom chips help large technology companies design specialized processors for AI applications. The business has become a major growth driver for Broadcom.
Analyst Reactions Mixed on Valuation
Following the earnings release, several top analysts weighed in on Broadcom’s performance. Baird analyst Tristan Gerra maintained his Buy rating but kept his price target at $210.
Gerra noted the stock trades at a rich valuation compared to other semiconductor companies. He expects potential revenue growth slowdowns in the first half of 2026 before new customer ramps begin.
Mizuho analyst Vijay Rakesh took a more bullish stance. He raised his price target to $310 from $300 while maintaining a Buy rating.
Rakesh highlighted Broadcom’s industry-leading gross margins of about 79% and operating margins near 65%. He projects the company’s AI revenue will grow to $19 billion in fiscal 2025 and nearly $32 billion in fiscal 2026.
Deutsche Bank analyst Ross Seymore also increased his price target. He boosted it to $270 from $205 while keeping a Buy rating.
Seymore said results and guidance met expectations overall. The AI business delivered upside while the software business remained steady.
Wall Street Consensus Remains Positive
Wall Street maintains a Strong Buy consensus rating on Broadcom stock. The rating comes from 27 Buy recommendations and two Hold ratings.
The average price target sits at $260.39 across all analysts covering the stock. This suggests the stock is fairly valued at current trading levels.
J.P. Morgan analyst Harlan Sur reiterated his Overweight rating earlier this week. He maintained a $250 price target on the shares.
Sur cited sustained AI fundamentals and aggressive value creation in the software business. He called Broadcom his top pick in semiconductor coverage.
Broadcom shares closed Thursday at $259.93. The stock has gained 12% year-to-date through Thursday’s close.
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