TLDR
- AVGO fell 12.6% on June 4 after AI revenue guidance disappointed investors
- Q2 adjusted EPS of $2.44 and revenue of $22.19 billion beat analyst estimates
- AI revenue more than doubled year-over-year to $10.8 billion in Q2
- Broadcom did not raise its $100 billion+ AI semiconductor revenue target for fiscal 2027
- Citi maintained a Buy rating; Erste Group upgraded AVGO to Buy from Hold on June 5
Broadcom (AVGO) dropped 12.6% on June 4 after its fiscal Q2 earnings report left some investors wanting more — specifically, a bigger AI revenue forecast.
The stock fell despite a beat on both the top and bottom lines. Broadcom posted adjusted EPS of $2.44 versus the $2.40 expected, and revenue of $22.19 billion, just a hair below the $22.27 billion consensus.
Revenue was up 48% from $15 billion a year earlier. Net income jumped 88% to $9.31 billion, or $1.91 per share, from $4.97 billion the prior year.
The problem? Broadcom didn’t raise its $100 billion-plus AI semiconductor revenue target for fiscal 2027. For investors who’d been hoping for an upgrade to that number, the silence stung.
CEO Hock Tan confirmed AI revenue more than doubled year-over-year to $10.8 billion in the quarter. The company is now guiding for $16 billion in AI revenue in the current quarter.
For Q3, Broadcom guided total revenue to roughly $29.4 billion, ahead of Wall Street’s estimate of $28.53 billion.
What’s Behind Broadcom’s AI Business
Broadcom’s AI business works differently from Nvidia’s. Rather than selling off-the-shelf GPUs, Broadcom helps customers design custom AI accelerators built for their specific workloads.
Tan named Anthropic, Alphabet, Meta, and OpenAI among its six major AI customers. Anthropic alone placed an order worth roughly $10 billion for AI chips last year.
The stock is still up around 21% in 2026, outperforming the Nasdaq Composite’s 15.4% gain year-to-date. It has surged roughly sevenfold since the end of 2022.
Wall Street Reaction
Despite the selloff, not everyone hit the panic button. Citi kept its Buy rating on AVGO while flagging a key watch point around future AI guidance.
On June 5, Erste Group upgraded Broadcom to Buy from Hold, citing faster growth than peers and above-average prospects.
The selloff came one day after the results hit. By June 5, at least two Wall Street firms were reaffirming or upgrading their outlook on the stock.
Broadcom is guiding for $16 billion in AI revenue in Q3, which would represent another step up from the $10.8 billion posted in Q2.
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