Citi has reassessed its price target for Broadcom (AVGO) after the company experienced a 12.6% decline in stock following a disappointing AI revenue forecast, despite strong quarterly earnings that exceeded market expectations. Broadcom's Q2 results showed revenue of $22.19 billion and earnings of $2.44 per share, both slightly above forecasts, with AI revenue more than doubling to $10.8 billion. Citi maintains a 'buy' rating and a $500 price target, viewing the stock's dip as a buying opportunity, while cautioning that approximately 35-40% of Broadcom's sales come from its largest customer, Google. The company's AI revenue is expected to grow, but a lack of increased guidance has left some investors concerned.

Citi revisits Broadcom stock price target after post-earnings selloff

Here’s what could be next for Broadcom stock.

Jun 5, 2026 8:52 AM EDT

By Silin Chen

Edited by Celine Provini

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Key Points

Broadcom shares fell 12.6% after AI revenue guidance disappointed investors.
Quarterly revenue and earnings beat expectations; AI revenue more than doubled to $10.8 billion.
Citi maintained a buy rating for Broadcom stock but added a key watch point.

Broadcom ( AVGO) shares fell 12.6% on June 4 after the chipmaker delivered quarterly results that largely matched Wall Street expectations but failed to provide the AI revenue boost some investors were hoping for.

The company reported fiscal second-quarter adjusted earnings of $2.44 a share on revenue of $22.19 billion. Analysts had expected earnings of $2.40 a share and revenue of $22.27 billion, CNBC reported.

Revenue increased 48% from $15 billion a year earlier, while net income jumped 88% to $9.31 billion, or $1.91 a share, from $4.97 billion, or $1.03 a share, in the same quarter last year.

For the current quarter, Broadcom forecast revenue of about $29.4 billion, ahead of Wall Street estimates of $28.53 billion.

Despite the strong growth, investors appeared disappointed that Broadcom did not raise its forecast for more than $100 billion in AI semiconductor revenue by fiscal 2027, Investopedia noted.

The stock remains up about 21% this year, outperforming the Nasdaq Composite’s 15.4% gain. Shares have surged roughly sevenfold since the end of 2022 as demand for artificial intelligence infrastructure accelerated following the launch of ChatGPT.

Custom AI chips are becoming a bigger business for Broadcom

Broadcom is one of the biggest beneficiaries of the AI boom, though its business differs from rivals such as Nvidia ( NVDA) and Advanced Micro Devices ( AMD).

While Nvidia primarily sells graphics processing units, or GPUs, that power AI training and inference, Broadcom helps customers design custom AI accelerators tailored to their specific workloads.

Chief Executive Hock Tan said in the earnings call that AI revenue more than doubled from a year ago to $10.8 billion during the quarter. The company expects AI revenue to reach $16 billion in the current quarter.

Tan said Broadcom’s six major AI customers include Anthropic, Alphabet ( GOOGL), Meta Platforms ( META), and OpenAI. Last year, Tan disclosed that Anthropic had placed an order worth roughly $10 billion for AI chips, CNBC reported.

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The company continues to see what Tan described as “insatiable” demand for AI infrastructure. Bookings exceeded $30 billion during the quarter, compared with roughly $11 billion of AI products shipped.

Still, Broadcom reiterated rather than raised its AI forecast.

“We expect this momentum to continue into fiscal year 2027 and reiterate our AI semiconductor revenue guidance to be in excess of $100 billion,” Tan said during the earnings call.

Tan also revealed that Broadcom plans to focus on supplying “only chips,” rather than complete AI systems, as Broadcom had previously said it would be providing to its customers.

Broadcom stock closed at $418.91 a share on June 4. Getty Images

Citi sees selloff as a buying opportunity

Analysts at Citi said the earnings report was largely in line with expectations, though AI revenue guidance for the July quarter came in slightly below Wall Street forecasts.

Citi maintained its buy rating and $500 price target on the stock. “We view the share price pullback as an enhanced buying opportunity,” the analysts wrote in a research note shared with TheStreet.

Broadcom expects gross margin to decline to about 74% in the current quarter from roughly 77% previously as AI chips account for a larger share of sales. AI revenue is expected to increase from about 30% of total revenue in the April quarter to roughly 38% in the July quarter.

Citi said the lower margin outlook reflects a growing mix of custom AI chips, which typically carry lower gross margins than Broadcom’s networking products and software businesses.

“Lower gross margins due to higher AI sales mix are offset by stable operating margins,” the analysts said.

While Citi remains bullish on Broadcom, the firm noted that investors should keep an eye on one key customer.

“We estimate it derives ~35-40% of sales from its largest customer, Google. Therefore, any major uptick/downtick in demand for Google’s products could result in upside/downside to our estimates and rating for Broadcom,” the analysts wrote.

About the authors

Silin Chen

Silin Chen is a financial markets reporter at TheStreet, covering stocks, investing trends, and market developments. She holds a Master’s Degree in Business and Economic Reporting from NYU and previously interned at the Financial Times, reporting on breaking news and retail markets. Silin leverages her reporting expertise to help readers make informed investment decisions. She also has two years of experience covering mutual funds and investing in Shanghai, China. Silin is passionate about helping readers understand the market and loves playing with her cat. You can reach out to silin.chen@thearenagroup.net with your tips and suggestions.

Celine Provini

Celine is a writer and editor with over 20 years of experience and has covered diverse news, features, academic/research, and legal topics. At TheStreet.com, Celine is a senior editor with experience across retail, stocks, investing, personal finance, technology, the economy, and travel.

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