Broadcom just posted one of the strongest quarters in its history, and the stock got punished for it. Shares of AVGO fell roughly 14-15% in after-hours trading and the following session after the company reported fiscal Q2 2026 earnings on June 3, despite beating expectations on both the top and bottom lines.
The culprit: an unchanged full-year AI revenue target of $100B that left traders wanting more.
The numbers tell one story, the stock tells another
Broadcom’s fiscal Q2 revenue landed at $22.19B, a 48% jump compared to the same quarter a year ago. Adjusted earnings per share came in at $2.44, topping analyst estimates.
The real headline within the headline was AI semiconductor revenue. That segment generated $10.8B, a 143% year-over-year increase. For context, that single business line now accounts for roughly half of the company’s total quarterly revenue.
Looking ahead, Broadcom guided Q3 total revenue to $29.4B, with $16B expected from AI semiconductors alone.
So why did the stock crater? Two reasons stood out. First, the company held its full-year AI revenue forecast steady at $100B, which some investors interpreted as a lack of upside surprise. Second, guidance on non-AI product segments was mixed, creating uncertainty about the breadth of Broadcom’s growth story beyond its hottest vertical.
Analysts line up on the buy side
The post-earnings selloff triggered a wave of price target increases from major Wall Street firms. Mizuho raised its price target to $530 while maintaining a Buy rating. Jefferies went higher, lifting its target to $550 with a Buy. Morningstar was the most bullish of the bunch, bumping its fair value estimate to $650 from $550, an 18% increase. The consensus analyst price target now clusters in the $490-$511 range, with an overall Strong Buy rating.
The lone dissenter was Macquarie, which downgraded Broadcom to Neutral with a price target of $437. The firm’s concern centers on the possibility that Google, one of Broadcom’s most important AI chip customers, could increasingly develop its own custom silicon in-house.
Why AI chip revenue matters beyond Broadcom
Broadcom designs custom AI accelerators for some of the largest technology companies on the planet, including Google and, more recently, OpenAI. The 143% year-over-year growth in AI revenue reflects the pace at which these hyperscale customers are scaling their AI infrastructure. When Broadcom guides for $16B in AI semiconductor revenue next quarter, it’s essentially telegraphing the capital expenditure plans of its biggest clients months in advance.
Broadcom’s networking business, which includes its Tomahawk and Jericho switch silicon, also plays a supporting role. Training large AI models requires moving enormous amounts of data between thousands of accelerators, and Broadcom’s networking chips handle much of that traffic in hyperscale data centers.
What this means for investors
The key risk to monitor is customer concentration. Broadcom’s AI revenue is heavily dependent on a handful of hyperscale clients. Macquarie’s downgrade specifically flags the scenario where Google accelerates the shift toward fully in-house chip design, which could materially impact one of the company’s most important revenue pipelines.
Investors should also watch the trajectory of non-AI segments. The mixed guidance outside of AI chips suggests that Broadcom’s legacy businesses in enterprise software and traditional semiconductor products aren’t growing at the same clip.