Key Takeaways
- AVGO shares tumbled 12.6% on June 4 following disappointing AI revenue projections
- Fiscal Q2 results showed adjusted EPS of $2.44 and $22.19 billion in revenue, surpassing forecasts
- The company’s AI revenue segment soared to $10.8 billion, representing more than 100% year-over-year growth
- Management maintained its fiscal 2027 AI semiconductor revenue forecast at $100 billion+ without raising the target
- Citi reaffirmed its Buy recommendation; Erste Group raised AVGO to Buy from Hold on June 5
Broadcom (AVGO) experienced a significant 12.6% decline on June 4 following its fiscal second-quarter earnings announcement, as market participants expressed disappointment over the company’s artificial intelligence revenue outlook.
The selloff occurred even though the semiconductor giant exceeded Wall Street expectations across key financial metrics. The company delivered adjusted earnings per share of $2.44 compared to analyst predictions of $2.40, while revenue reached $22.19 billion, slightly trailing the consensus estimate of $22.27 billion.
Year-over-year revenue climbed 48% from the previous year’s $15 billion figure. Meanwhile, net income experienced an impressive 88% surge, reaching $9.31 billion ($1.91 per share) versus $4.97 billion in the comparable period.
The market’s concern centered on what Broadcom didn’t announce: an increase to its fiscal 2027 AI semiconductor revenue projection of over $100 billion. Investors anticipating an upward revision were left disappointed by the unchanged forecast.
Chief Executive Hock Tan highlighted that AI-related revenue exceeded $10.8 billion during the quarter, marking more than a doubling from the year-ago period. Management projects AI revenue will reach $16 billion in the upcoming quarter.
For the third quarter, Broadcom’s total revenue guidance stands at approximately $29.4 billion, surpassing the Street’s $28.53 billion expectation.
Understanding Broadcom’s AI Strategy
Broadcom’s approach to the AI market diverges significantly from Nvidia’s model. Instead of marketing standardized GPU products, Broadcom partners with clients to engineer customized AI accelerator chips tailored to their unique computational requirements.
Tan identified several prominent technology firms among its six primary AI clients, including Anthropic, Alphabet, Meta, and OpenAI. Notably, Anthropic committed to an approximately $10 billion AI chip purchase last year.
Despite the recent decline, AVGO shares have gained roughly 21% in 2026, exceeding the Nasdaq Composite’s 15.4% year-to-date advance. The stock has multiplied approximately seven times since late 2022.
Analyst Perspectives
The post-earnings decline didn’t trigger widespread concern among Wall Street analysts. Citi maintained its Buy stance on AVGO while highlighting the importance of monitoring upcoming AI revenue guidance.
Erstwhile Group acted swiftly on June 5, elevating Broadcom from Hold to Buy, pointing to accelerated growth relative to industry peers and superior long-term opportunities.
The stock’s retreat occurred the day following the earnings release. Within 24 hours, multiple Wall Street firms had either reaffirmed or improved their ratings on the shares.
Broadcom’s $16 billion AI revenue forecast for Q3 would represent a substantial sequential increase from the $10.8 billion recorded in the second quarter.
