Broadcom stock plunges 12% after revenue miss despite AI chips doubling sales to $10.8 billion

Broadcom revenue miss stuns Wall Street, and its stock sinks after-hours

Broadcom revenue miss stuns Wall Street, and its stock sinks after-hours Shares of the chipmaker Broadcom Inc. came crashing down to Earth in late trading today after it reported weaker than expected second quarter revenue in its latest financial report. The stock fell initially, and then slid even further after Chief Executive Hock Tan declined to raise the company's full-year guidance for artificial intelligence chip sales beyond the current $100 billion forecast range. Broadcom, which has regularly blown away Wall Street's forecasts in recent quarters, struggled to impress today. The company reported earnings before certain costs such as stock compensation of $2.44 per share, edging past the Street's target of $2.40 per share. However, revenue came to just $22.19 billion, up 48% from a year earlier but below the $22.27 billion analyst consensus estimate. It was the first time the company came up short of the Street's targets since December 2024, following a series of impressive quarters driven by demand for AI processors such as Google LLC's tensor processing units. The company did at least increase its bottom line by an impressive margin, with net income coming to $9.31 billion at the end of the quarter, up from $4.96 billion in the year-ago period. For the current quarter, Broadcom said it's anticipating sales of around $29.4 billion at the midpoint of its guidance range, which is above the Street's consensus estimate of $28.53 billion. However, investors couldn't look past the revenue miss, and Broadcom's stock fell more than 12% in extended trading. It's still up about 38% in the year to date, surpassing the Nasdaq index's 16% gain so far this year. Since the end of 2022, the company's shares have increased ninefold amid rampant demand for AI chips. Broadcom has become one of the biggest beneficiaries of the AI boom because it helps some of the biggest cloud infrastructure providers and technology firms to design and develop custom AI processors. It owns a lot of the intellectual property, essential technologies and expertise required to design sophisticated semiconductors, and has become a key partner to just about anyone looking to avoid relying too heavily on Nvidia Corp.'s graphics processing units. In the last year or so it has gained even more attention as AI companies like Anthropic PBC and OpenAI push to develop their own custom AI processors. In December, the company reported that Anthropic had placed a $10 billion order for custom silicon. On a conference call with analysts, Tan said that Broadcom now has six customers for custom chips, including Anthropic, OpenAI, Google and Meta Platforms Inc., and that those are the main driving force behind its AI revenue growth. Many investors had hoped he would raise the company's AI chip revenue forecast, as he has in previous quarters, but he let them down today. "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. Tan added that the company also plans to sell "chips only" to some customers, rather than the fully-integrated AI systems it has traditionally sold. That means it will only sell the chips themselves, and not the server systems and networking infrastructure that usually goes with them. Nonetheless, Broadcom's AI revenue growth was impressive, with sales more than doubling from a year ago to $10.8 billion. Tan added that AI revenue is expected to grow to around $16 billion in the current quarter. "The bookings that are coming are not for immediate delivery," Tan said. "Some they hope to have, but the reality they all accept is they need to align quite a few other things in place before they can deliver." All told, Broadcom's semiconductor solutions business delivered $15.1 billion in sales, including networking infrastructure and its older legacy chips for Wi-Fi and automotive customers. That surpassed the Street's target of $14.72 billion. Broadcom also sells enterprise software through its infrastructure solutions group, which was bolstered by the acquisition of VMWare in 2023. That unit delivered $7.18 billion in revenue, up 9% from a year earlier but shy of the Street's forecast of $7.32 billion.

Broadcom CEO Hock Tan Says AI Isn't Hurting Software Business: 'We're Not Seeing It' - Broadcom (NASDAQ:A

AI Demand Is Driving VMware Growth Speaking during Broadcom's fiscal second-quarter earnings call, Tan said the company is seeing stronger momentum in its infrastructure software business, particularly from VMware, as customers expand computing capacity to support AI workloads. "We're not seeing it," Tan said when asked whether AI or agentic AI was affecting software growth and renewals. Instead, he pointed to rising hardware demand as a tailwind. "If anything else, as I reported, the high volume of core count of CPUs selling together with GPUs, it's driving some accelerated growth of our VMware business," Tan said. According to Tan, Broadcom expects this momentum to continue as enterprises increase spending on AI infrastructure over the coming quarters. Broadcom Sees No Long-Term Threat From AI To Software Business Tan said Broadcom's software portfolio remains closely tied to the infrastructure layer of computing, making it less vulnerable to disruption from emerging AI applications. "As you can see in Q3, we're seeing accelerated growth, and we expect that to continue, I guess, for the next multiple quarters as this demand picks up," he said. Looking further out, Tan signaled confidence in the durability of Broadcom's software strategy. "Given the kind of products we do in infrastructure software, very close to literally the hardware, basically the hypervisor, which is where our products are, we do not expect to see any impact on software products," Tan said. Broadcom Earnings Beat, Q3 Outlook Tops Estimates Broadcom posted second-quarter revenue of $22.19 billion, slightly below Wall Street expectations of $22.27 billion. However, the chipmaker reported adjusted earnings of $2.44 per share, topping analyst estimates of $2.40 per share. Looking ahead, Broadcom forecasts third-quarter revenue of about $29.4 billion, ahead of consensus estimates of $28.54 billion, while projecting adjusted EBITDA to account for 68% of expected revenue. Jensen Huang Says AI Boom Benefits Software Firms Speaking during his keynote at Computex in Taiwan, Huang said advances in agentic AI are driving significant breakthroughs, particularly in how AI systems use tools. "A lot of people have said, 'Jensen, AI is coming. Agentic AI is coming. Therefore, all of the software companies are going to go out of business.' I said it's exactly the opposite," he said at the time. Price Action: After-hours trading saw Broadcom shares plunge 13.78% to $413.21 after the stock closed Wednesday's session up 0.49% at $479.23, according to Benzinga Pro. Benzinga Edge Stock Rankings place AVGO in the 96th percentile for Quality, with the stock demonstrating strength across short, medium and long-term time frames. Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors. Photo Courtesy: Michael Vi on Shutterstock.com Market News and Data brought to you by Benzinga APIs To add Benzinga News as your preferred source on Google, click here.

Broadcom's AI Revenue Doubled -- And It May Not Even Be Halfway Done - Broadcom (NASDAQ:AVGO)

* AVGO stock is moving. See the chart and price action here. The company reported $8.4 billion in AI semiconductor revenue in Q1 FY2026, up 106% year over year -- and that wasn't even the headline. CEO Hock Tan guided Q2 AI revenue to $10.7 billion, a figure that, annualized, puts Broadcom on track for more than $40 billion in AI chip sales this fiscal year alone. Consider that the entire AI semiconductor market barely existed on Broadcom's income statement three years ago. $73 Billion AI Backlog The foundation for the growth is custom silicon. Broadcom builds application-specific accelerators, known as XPUs, tailored precisely to the workload demands of individual hyperscalers. Meta Platforms' (NASDAQ:META) MTIA accelerator runs on Broadcom silicon. So does infrastructure for Anthropic, ByteDance and OpenAI, which signed a multi-year collaboration in October 2025 for chips targeting deployment in the second half of 2026. Apple Inc. (NASDAQ:AAPL) is widely expected to be next, reportedly partnering with Broadcom on a custom AI server chip codenamed Baltra. The customer roster is what makes the numbers so striking -- and what makes the forward projections harder to dismiss as hype. Citi projects Broadcom's total AI revenue will reach $115 billion in fiscal 2027 and $180 billion in fiscal 2028, which would represent roughly 81% of the company's total sales. Underpinning the outlook is a $73 billion AI backlog -- larger than Broadcom's entire fiscal 2025 revenue base -- with delivery scheduled over approximately the next 18 months. Broadcom's Moat Broadcom's competitive moat is unusually deep. Custom chip design requires years of co-engineering with the customer, deep process-node expertise and the ability to manage an entire system. Heading into the Q2 print, the question isn't whether Broadcom is an AI winner -- it's whether Broadcom stock's 93.5x P/E already reflects the full runway. If Citi's numbers are even directionally right, the answer may still be no. AVGO Price Activity: Broadcom shares were up 1.34% at $488.00 at the time of publication on Wednesday. The stock is trading near its 52-week high of $488.82, according to Benzinga Pro data. This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors. Market News and Data brought to you by Benzinga APIs To add Benzinga News as your preferred source on Google, click here.

Broadcom 2Q Revenue Climbs on AI Chip Demand

Broadcom logged higher revenue in its latest quarter driven by demand for its artificial-intelligence chips. The semiconductor and software maker on Wednesday posted a second-quarter profit of $9.31 billion, or $1.91 a share, compared with $4.97 billion, or $1.03 a share, a year earlier. Adjusted earnings per share were $2.44, compared with estimates of $2.40 a share according to analysts polled by FactSet. Revenue climbed 48% to $22.19 billion, compared with analyst estimates of $22.13 billion. Semiconductor revenue from AI more than doubled to $10.8 billion in the quarter, boosted by increasing demand for custom AI accelerators and AI networking, Chief Executive Hock Tan said. That momentum has continued into the current quarter, Tan said, forecasting semiconductor revenue from AI will more than triple to $16 billion. Broadcom forecasts overall revenue of $29.4 billion for the current third quarter, compared with analysts' projection of $28.25 billion.