Broadcom set to shed $300 billion in value as AI results …

Broadcom's share price plummeted over 14% following disappointing second-quarter revenue results, missing analyst expectations related to its AI chip business. The company's revenue of $22.19 billion fell short, and its unchanged fiscal 2027 AI revenue forecast disappointed investors. Despite the setback, Broadcom still experienced significant growth in AI chip sales, forecasting $16 billion for the current quarter, up from $5.2 billion a year ago. This decline triggered a selloff in the semiconductor sector, affecting several major chip manufacturers. Analysts noted that while Broadcom is a key player in AI infrastructure, its high stock expectations may limit near-term performance.

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Summary
Companies
Broadcom results spark selloff in chip sector
Unchanged fiscal 2027 AI revenue forecast disappoints investors
Broadcom also missed second-quarter revenue expectations
Stock may take a pause for a few quarters, analyst says

June 4 (Reuters) - Broadcom (AVGO.O), opens new tab shares slumped more than 14% on Thursday, dragging chip peers lower, after the company's results fell short of lofty expectations around demand for its ‌custom AI chips business.

The losses, if sustained, will erase more than $315 billion from the company's market value of about $2.268 trillion, in one of the biggest one-day wipeouts ever.

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Broadcom's crucial role in helping design in-house processors of firms like Alphabet (GOOGL.O), opens new tab and Meta (META.O), opens new tab that serve as alternatives to Nvidia's (NVDA.O), opens new tab costly chips has made it one of the biggest winners of the AI boom.

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After years of treading water, its stock has jumped more than eightfold since ChatGPT's 2022 launch.

Shares have climbed 38% this year, as of last close, including a 15% rally in ⁠the two weeks ahead of its earnings after rival Marvell Technology's (MRVL.O), opens new tab strong results.

But Broadcom faces tougher competition and its eye-watering gains have left little room for error, analysts said, adding the decision to reiterate, rather than raise, its $100 billion AI revenue forecast for fiscal 2027 disappointed investors.

Its second-quarter revenue of $22.19 billion also missed expectations, while its current-quarter AI chip sales forecast of $16 billion was slightly below Wall Street estimates.

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Still, the $16 billion would mark an over three-fold jump from about $5.2 billion a year ago. The $100 billion forecast given in March also shows how quickly the company has gained ground in the chip race. AI revenue stood at just $20.2 billion in fiscal 2025.

It is "a classic case of very high expectations meeting a market that wanted perfection," Matt Britzman, senior equity analyst at Hargreaves Lansdown, said. "Broadcom is one of the more exciting names in ‌the ⁠AI infrastructure buildout, but it also came into results as one of the higher-risk names."

SECTOR FEELS THE HEAT

The results sparked a selloff in chip stocks, with Marvell down nearly 5%, while AMD (AMD.O), opens new tab, Intel (INTC.O), opens new tab, Micron (MU.O), opens new tab, and Qualcomm (QCOM.O), opens new tab fell between 1.6% and 6.5%. The stocks had gained sharply earlier this week thanks to a flurry of positive announcements at Computex.

Broadcom's shares are set to drop sharply after its earnings report disappointed

To be sure, Broadcom CEO Hock Tan said the company now expects to ship more than 10 gigawatts' worth of AI ⁠chips in 2027, a slight increase from previous estimates.

Executives also said the company was "very comfortable" amid the memory chip supply crunch, having secured supply for 2026 and 2027.

Confident of the company's long-term prospects, at least 22 analysts raised their price targets on Broadcom's stock, pushing the median view to $500, according to LSEG ⁠data. That represented a more than 4% upside to the stock's last close.

The stock trades at 29.90 times its forward earnings estimates, compared with Marvell's 61.70 multiple and the broader S&P 500 index's (.SPX), opens new tab 27.94.

"We suspect the shares may take a pause for the next couple of quarters. ⁠But the story gets interesting again once we enter 2027," Bernstein analyst Stacy Rasgon said in a note.

"If we have to wait a quarter or two for that story to re-emerge, that's OK, we'll wait for it."

Reporting by Rashika Singh and Zaheer Kachwala in Bengaluru, Writing by Aditya Soni; Editing by Harikrishnan Nair and Sriraj Kalluvila

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Rashika Singh

Thomson Reuters

Rashika reports on brokerages and financial markets, alongside technology and corporate developments for Reuters, with a focus on U.S. and global companies. Her coverage spans analyst actions, earnings-driven stock moves, semiconductors, artificial intelligence, aerospace and defense, and high‑growth technology stocks, often through breaking news and market‑moving “hot stock” coverage. Her reporting primarily appears in the Technology, Business, and Markets sections of the Reuters website and wire service, examining how brokerage research, corporate strategy and earnings influence investor sentiment and global competition. She regularly contributes to Reuters’ spot and breaking‑news coverage, rather than a named column or standalone newsletter.

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