Broadcom shares tumble over AI revenue forecast miss

Broadcom's stock slid more than 14% in pre‑market trading on Friday, marking its steepest one‑day drop in about 16 months. The decline followed the company’s forecast that AI‑related semiconductor revenue would reach $16 billion in the third quarter, below analysts’ average expectation of $17.2 billion. Although total revenue for the quarter is projected at $29.4 billion, slightly ahead of consensus, the shortfall in AI earnings disappointed investors who had anticipated higher growth.

In the second quarter, Broadcom reported a 48% rise in revenue to $22.2 billion and AI chip sales surged 143% to $10.8 billion, exceeding expectations. CEO Hock Tan reaffirmed the company’s long‑term target of $100 billion in AI revenue by 2027 and said the firm will sell $56 billion of AI chips in the fiscal year ending October. Despite the earnings beat, analysts cited the lower AI outlook and margin concerns as the main reasons for the sell‑off. Some banks raised price targets, and the stock showed modest recovery in early after‑hours trading, hovering near the psychologically important $400 level.