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Broadcom’s AVGO stock price fell 15% in premarket trading on June 4 after the chipmaker’s disappointing artificial intelligence guidance overshadowed stronger-than-expected earnings. The custom chip designer reported Q2 revenue of $22.19 billion, beating consensus estimates, but failed to impress investors with its forward outlook for AI semiconductor sales.
Earnings Beat, Guidance Miss
Broadcom topped fiscal second-quarter estimates on both the top and bottom lines. The company reported earnings per share of $2.44, exceeding analyst expectations of $2.39. Revenue of $22.19 billion also surpassed the consensus estimate of $22.13 billion, representing a 48% increase from the same quarter a year earlier.
The real disappointment came in the forward guidance. The company projected AI chip revenue of $16 billion for the current quarter, falling short of analyst estimates of $17.2 billion. More significantly, CEO Hock Tan did not raise Broadcom’s full-year 2026 AI semiconductor guidance, reiterating the prior target of more than $100 billion.
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“The bar was really high going into the print here,” Angelo Zino, senior vice president at CFRA Research, told Yahoo Finance, explaining the sharp market reaction to the results.
Strong AI Momentum, Tempered Expectations
Despite the stock decline, Broadcom’s underlying AI business showed robust growth. AI semiconductor revenue in Q2 more than doubled to $10.8 billion year-over-year, driven by demand for custom AI accelerators and networking components used by hyperscalers like Google, Meta, and OpenAI. The company’s customers also include AI developer Anthropic.
Before the earnings report, AVGO stock had surged 38% year to date, hitting multiple all-time highs as investors anticipated solid results. The premarket decline on June 4 wiped out weeks of gains, reflecting how elevated expectations had become. Tan’s decision to hold guidance steady, rather than raise it in light of strong current-quarter momentum, signaled caution about the sustainability of AI spending growth.
Sources
- Yahoo Finance — Q2 earnings results, premarket stock decline, analyst commentary
- CNBC — Full-year AI guidance, CEO commentary, revenue and earnings details
- Wall Street Journal — After-hours trading decline, revenue growth drivers, forward guidance
