Broadcom Inc (AVGO) Crashes 13.8% After Hours as AI Revenue Forecast Disappoints

Broadcom Inc (AVGO) surprised investors after reporting strong fiscal Q2 2026 results, yet the stock plunged 13.8% in after-hours trading as Wall Street focused on weaker-than-expected AI revenue guidance rather than the earnings beat. The sharp reaction highlights how high expectations have become for leading AI semiconductor companies. Investors were looking for stronger forecasts and an upgraded long-term AI outlook, but management largely maintained its previous targets. 

Broadcom Inc Q2 Results: What Happened?

• Revenue reached $22.19 billion, up 48% year over year, but slightly below the Street estimate of $22.27 billion. 
• Adjusted earnings came in at $2.44 per share, beating analyst expectations of roughly $2.40 per share. 
• AI semiconductor revenue surged 143% year over year to $10.8 billion, setting a new company record and exceeding Broadcom’s own forecast. 
• Infrastructure software revenue reached $7.18 billion, missing analyst expectations of about $7.32 billion, which added pressure on sentiment. 

Why Did Broadcom Inc Shares Crash After Hours?

The biggest concern was Broadcom’s AI revenue forecast for the current quarter.

• Management guided Q3 AI semiconductor revenue to $16 billion, while analysts were expecting approximately $16.36 billion. The difference was small, but investors had priced in an even stronger outlook.
• CEO Hock Tan also reaffirmed the company’s long-term target of more than $100 billion in AI revenue by 2027, rather than raising it. Investors had hoped for a higher forecast after the recent rally in AI stocks. 
• According to reports from Marketscreener and other financial media outlets, the selloff reflected a classic “sell the news” reaction after Broadcom shares had gained more than 50% in the previous three months. 

Broadcom Inc Outlook Remains Strong

• Despite the stock decline, Broadcom projected Q3 revenue of approximately $29.4 billion, above analyst estimates of $28.5 billion. 
• Semiconductor revenue reached $15.01 billion in Q2, while free cash flow totaled $10.26 billion, representing 46% of revenue. 
• Major AI customers continue to include Google, Meta, OpenAI, and Anthropic.

Broadcom Inc Valuation Pressure Triggers Profit Taking

• Revenue growth of 48%, AI revenue growth of 143%, and free cash flow of $10.26 billion were not enough to satisfy investors because Broadcom Inc entered earnings at near record valuation levels.
• Shares had gained more than 50% in the previous three months, raising expectations for a major AI guidance upgrade and stronger long-term growth projections.
• Management reaffirmed its existing target of exceeding $100 billion in annual AI revenue by 2027, but did not announce a higher forecast, causing some investors to reassess near-term upside potential.
• The after-hours selloff reflected profit-taking and valuation concerns rather than weakness in the company’s operations, as Broadcom continues to benefit from rising AI infrastructure spending across hyperscale cloud customers.

Investor Outlook on Broadcom Inc. After the Selloff

The market reaction appears driven more by expectations than by business weakness. Broadcom delivered 48% revenue growth, 54% earnings growth, and 143% AI revenue growth, numbers that would normally be considered exceptional. However, investors wanted a larger AI forecast, stronger software revenue, and a higher 2027 AI target.

For long-term investors, the key takeaway is that AI demand remains strong, with Q3 AI revenue expected to hit $16 billion and total Q3 revenue projected at $29.4 billion. The after-hours decline reflects disappointment versus expectations rather than a deterioration in Broadcom’s core AI business. Investors will now watch whether Broadcom can maintain its path toward $100 billion in annual AI revenue by 2027 while defending its leadership position against competitors such as NVIDIA and Marvell Technology. 

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