Broadcom’s stock plunged 13% after management guided third-quarter AI chip revenue of $16 billion, falling short of the $17.2 billion analysts had projected. Valuation screens now assign Broadcom a grade of F or D-, highlighting a sharply elevated premium compared with peers like Micron Technology and Skyworks Solutions.
Broadcom projected $16 billion in AI chip revenue for the third quarter, falling short of the $17.2 billion consensus forecast and signaling weaker-than-expected demand. Management attributed the shortfall to slower enterprise orders and cautious spending cycles among major cloud customers.
Shares tumbled 13% in the session following the guidance announcement, driving Broadcom’s valuation grade down to F or D- on major screening models. The sharp decline underscores investor caution over paying rich premiums for future AI-driven growth amid rising interest rates.
Broadcom’s pullback reignites scrutiny of AI chip valuations, contrasting with companies like Micron Technology and Skyworks Solutions, which carry B+ grades for more moderate multiples. Investors may increasingly favor names with stronger balance sheets and clearer profit visibility as sector rallies mature.
Fool
