Broadcom Plunges 20% Despite 143% AI Semiconductor Growth and $16B Q3 AI Guidance
Broadcom reported Q2 revenue up 48% year-over-year and AI semiconductor revenue up 143% year-over-year but shares dropped over 20% post-earnings. It secured multi-year AI silicon and networking deals with Google, Meta, Anthropic and OpenAI, guided $16B for Q3 AI semiconductors and reiterated a $100B-plus FY27 AI revenue goal.
1. Q2 Earnings Drive Record Growth
Broadcom delivered record Q2 results, with total revenue up 48% year-over-year and AI semiconductor revenue surging 143% year-over-year. Free cash flow margin expanded to 46%, highlighting robust profitability in its Semiconductor Solutions segment.
2. Market Reaction and Valuation Shift
Despite the strong results, Broadcom shares plunged over 20% in the days following the earnings release as investors recalibrated expectations on AI guidance. The forward price-to-earnings ratio retreated to 15x based on 2028 earnings estimates.
3. Multi-Year AI Contracts and Future Guidance
The company secured multi-year, multi-generation AI silicon and networking agreements with Google, Meta, Anthropic and OpenAI, ensuring revenue visibility through 2028. Management guided $16 billion in Q3 AI semiconductor revenue and reiterated a $100B-plus AI revenue target for fiscal 2027.
