Key Takeaways
- AVGO shares plunged 12.6% on June 4 following underwhelming AI revenue outlook
- Fiscal Q2 adjusted earnings of $2.44 per share and $22.19 billion in revenue topped forecasts
- Artificial intelligence revenue surged past $10.8 billion in Q2, more than doubling from last year
- Company maintained its fiscal 2027 AI semiconductor revenue projection above $100 billion
- Citi reaffirmed Buy stance; Erste Group raised AVGO to Buy from Hold on June 5
Broadcom (AVGO) experienced a sharp 12.6% decline on June 4 following its fiscal second-quarter earnings announcement, as investors expressed disappointment over the company’s artificial intelligence revenue outlook.
The decline occurred even though the semiconductor giant exceeded expectations on both earnings and revenue. The company delivered adjusted earnings per share of $2.44 compared to analyst projections of $2.40, while revenue reached $22.19 billion, slightly trailing the consensus estimate of $22.27 billion.
Revenue climbed 48% from the previous year’s $15 billion. Net income nearly doubled, rising 88% to $9.31 billion, or $1.91 per share, compared to $4.97 billion in the same period last year.
The market’s concern? Broadcom chose not to increase its fiscal 2027 AI semiconductor revenue target exceeding $100 billion. Investors anticipating an upward revision to that forecast were left disappointed.
Chief Executive Hock Tan reported that AI revenue exceeded $10.8 billion during the quarter, representing more than double the year-ago figure. Looking ahead, the company projects $16 billion in AI revenue for the upcoming quarter.
For its fiscal third quarter, Broadcom provided revenue guidance of approximately $29.4 billion, surpassing Wall Street’s consensus of $28.53 billion.
Understanding Broadcom’s Artificial Intelligence Strategy
Broadcom’s approach to the AI market differs significantly from Nvidia’s model. Instead of marketing standard graphics processing units, Broadcom collaborates with clients to engineer customized AI accelerators tailored to their unique computational requirements.
Tan identified Anthropic, Alphabet, Meta, and OpenAI as part of its roster of six primary AI customers. Notably, Anthropic committed to an AI chip order valued at approximately $10 billion during the previous year.
Despite the recent setback, AVGO shares remain approximately 21% higher in 2026, exceeding the Nasdaq Composite’s 15.4% year-to-date advance. The stock has multiplied roughly sevenfold since late 2022.
Analyst Community Response
The post-earnings selloff didn’t trigger widespread pessimism among Wall Street analysts. Citi maintained its Buy recommendation on AVGO while highlighting the importance of monitoring upcoming AI guidance.
On June 5, Erste Group elevated Broadcom’s rating to Buy from Hold, pointing to accelerated growth relative to competitors and superior long-term potential.
The stock retreat occurred the day after results were announced. Within 24 hours on June 5, at least two financial institutions had either reaffirmed or improved their positions on the semiconductor company.
Broadcom’s Q3 guidance calls for $16 billion in AI revenue, marking a substantial increase from the $10.8 billion reported in the second quarter.
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