Broadcom Shares Experience Sharpest Decline in Over a Year Following Weak AI Earnings Outlook

Broadcom Shares Plummet 15.3% After AI Revenue Outlook Disappoints

Shares of Broadcom Inc crashed 15.3% on Thursday, June 4, falling to around $406 apiece on the NYSE after the company's fiscal second-quarter numbers and its decision not to raise its AI revenue expectations for fiscal 2026 and 2027 disappointed Wall Street investors. If the losses are sustained through the close, it would mark the stock's biggest single-day decline since January 2025 and could wipe out more than $300 billion from the company's market value of about $2.268 trillion.

The sharp correction came after the stock enjoyed a strong bull run during the first five months of 2026, climbing 38% this year as of the previous close, including a 15% rally in the two weeks ahead of its earnings following strong results from rival Marvell Technology. In just the last five trading sessions, Broadcom had added nearly $270 billion in market value, driven by continued optimism around artificial intelligence. However, the AI-driven rally is now facing a fresh test after the company's underwhelming outlook for AI chip revenue.

The AI revenue outlook was a major disappointment for investors, with Broadcom reiterating its $100 billion AI revenue forecast for fiscal 2027, rather than raising it. Analysts had projected $17.2 billion in AI semiconductor revenue for the fiscal third quarter ending in July, but Broadcom expects only $16 billion. This forecast represents more than a threefold jump from about $5.2 billion reported a year earlier.

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The company said total revenue for the period ending in July would be about $29.4 billion, compared with analysts' average estimate of $28.6 billion. Broadcom has signed and expanded long-term deals with companies such as Alphabet's Google, Anthropic, and Meta Platforms, but questions remain over how much of that business will be recognized as revenue each quarter instead of being reflected in a multiyear backlog.

Chief Executive Officer Hock Tan said Broadcom expects to generate $56 billion in AI chip revenue in the fiscal year ending October. However, this forecast also fell short of the Bloomberg-compiled analyst estimate of $57.6 billion. In the fiscal second quarter ended May 3, the chipmaker's sales rose 48% to $22.2 billion, slightly ahead of analysts' average estimate of $22.1 billion. Earnings climbed to $2.44 per share, excluding certain items, compared with expectations of $2.39 per share.

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The segment including custom-built accelerators used to develop and run AI models, along with networking semiconductors, saw AI semiconductor revenue come in at $10.8 billion, marginally above analysts' estimate of $10.7 billion.