Broadcom Stock Tumbles on AI Forecast

Broadcom's stock tumbled significantly after its Q2 2026 earnings report, despite beating analyst forecasts for both earnings and revenue. The company reported non-GAAP earnings of $2.44 per share and sales of nearly $22.2 billion, with actual GAAP earnings at $1.91 per share, an 85% year-over-year surge. Free cash flow increased by 60%, and sales grew 48%. AI semiconductor revenue accelerated, making up nearly 50% of total revenue and growing 143% year-over-year. However, investors were disappointed by Broadcom's forecast for AI chip revenue, which projected US$16 billion for fiscal Q3 (below the US$17.2 billion analyst estimate) and US$56 billion for the fiscal year (below the US$57.6 billion estimate). The company also reiterated its target of over $100 billion in AI semiconductor revenue by fiscal 2027, which investors had hoped would be raised. Broadcom has expanded long-term deals with key customers like Alphabet Inc., Anthropic, Meta Platforms, and OpenAI, and is involved in financing arrangements to support these partnerships. The stock's decline is attributed to outsized investor expectations and valuation concerns, rather than a stumble in the business itself.