Broadcom stock plunges 24% after weaker AI guidance

Broadcom shares dropped about 24% after the company’s guidance for third-quarter AI-chip revenue came in below some investor forecasts and management chose not to raise its fiscal 2027 AI-sales target, despite a strong quarterly report.

For the fiscal second quarter, Broadcom reported revenue of $22.2 billion, up 48% from a year earlier, and adjusted earnings per share of $2.44. AI semiconductor revenue reached $10.8 billion, a 143% increase from the prior year.

For the fiscal third quarter, Broadcom projected roughly $16 billion in AI-chip revenue, below investor expectations that had centered near $17 billion or higher. CEO Hock Tan reiterated a goal of more than $100 billion in AI chip sales by fiscal 2027 but did not increase that target.

Management reported AI semiconductor bookings in the quarter exceeded $30 billion, more than double the $10.8 billion it shipped. The company also noted gigawatt-scale commitments from major customers including Anthropic, OpenAI and Meta, and expects to ship more than 10 gigawatts of AI chips in 2027, slightly above its prior view. Hock Tan described demand for XPUs and networking as “simply insatiable.”

Trading volume surged as the stock fell, a rapid selloff that extended pressure across the semiconductor sector. Shares of other chip makers including Nvidia, AMD, Marvell, Intel, Micron, Texas Instruments and Analog Devices moved lower in the days after Broadcom’s report.

Wall Street analysts largely maintained positive ratings. JPMorgan reiterated an Overweight rating and a $580 price target and advised clients it would be “aggressive buyers” at current levels. Recent analyst screens showed many Buy ratings, average price targets above $500, a small number of Holds and no Sell recommendations.

Company executives flagged potential margin risks as AI becomes a larger share of revenue. Chief Financial Officer Kirsten Spears warned that margins could face pressure because some AI system sales may carry lower margins than Broadcom’s software offerings. Hock Tan acknowledged that large customers such as Google could diversify TPU suppliers over time while Broadcom remains part of Google’s custom chip roadmap.

The company’s results showed rapid revenue growth and strong booking activity, while the guidance shortfall and unchanged long-term target prompted investors to reassess near-term expectations for scaling AI chip revenue and margins.