Broadcom Stock Crashes 14% After AI Forecast Disappoints, June 04

Broadcom reported fiscal Q2 2026 earnings on June 3 that beat profit expectations but disappointed on forward guidance. The stock fell 14% to $411.55 the next day, erasing roughly $351 billion in market value. CEO Hock Tan did not raise the company’s full-year AI chip revenue target, leaving investors who expected acceleration with a sense of letdown.

Strong Results Masked by Unchanged Guidance

Broadcom posted adjusted earnings of $2.44 per share, beating the $2.40 estimate. Revenue hit $22.19 billion, just below the $22.27 billion consensus. The real disappointment came from forward guidance. CEO Tan reiterated the existing $100 billion annual AI chip revenue target for 2027 without raising it, despite AI semiconductor revenue more than doubling to $10.8 billion in Q2, a 143% year-over-year jump. Analysts had expected a higher forecast given the momentum.

Software Unit Misses Expectations

Broadcom’s infrastructure software segment, built largely around VMware, generated $7.18 billion in revenue. This fell short of the $7.32 billion analysts wanted, even though it grew 9% from a year ago. The software miss added to investor disappointment alongside the unchanged AI guidance. Combined, these factors triggered the sharp selloff in after-hours trading on June 3.

AI Momentum Remains Strong Despite Stock Decline

Total company revenue climbed 48% year-over-year to $22.19 billion. Net income surged 88% to $9.31 billion. Broadcom named six core AI chip customers including Google, Meta, Anthropic, and OpenAI. The company guided Q3 total revenue to $29.4 billion, topping the $28.53 billion Wall Street expected. CEO Tan projected Q3 AI semiconductor revenue will reach $16 billion, a more than 200% year-over-year increase. Broadcom also disclosed over $30 billion in AI bookings against $10.8 billion shipped, with visibility extending to 2028.

Why the Market Sold Off Despite the Numbers

Broadcom stock had rallied nearly 40% this year and multiplied almost ninefold since the end of 2022. At these levels, the stock was priced for perfection. When the company held guidance steady instead of raising it, the market treated the news as a miss. Analysts at multiple firms noted the guidance disappointment, signaling that even strong results cannot satisfy sky-high expectations. With Meyka rating AVGO a B and analyst consensus at Buy, the data points to limited downside from current levels, though near-term volatility remains elevated.

Final Thoughts

Broadcom delivered record AI revenue growth but disappointed on forward guidance, triggering a 14% stock crash. The selloff reflects elevated expectations, not weak fundamentals. Investors should watch Q3 execution closely.

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