Broadcom Sees 14% Pre-Market Plunge, Market Cap Falls $319B After AI Guidance
AVGO•Broadcom shares plunged over 14% pre-market after the company declined to raise AI revenue forecasts for fiscal 2026 and 2027, erasing roughly $319 billion in market cap despite second-quarter beats. Analysts maintain Buy ratings and lifted price targets to $500–$580 on 180% AI revenue growth expected in fiscal 2026.
1. Earnings and Guidance
Broadcom reported fiscal Q2 adjusted EPS of $2.44 and revenue of $22.19 billion, topping estimates. Management held AI revenue forecasts for fiscal 2026 and 2027 steady while guiding Q3 revenue at $29.4 billion with a 68% EBITDA margin.
2. Market Reaction and Valuation Impact
Shares slid over 14% in pre-market trading, erasing about $319 billion in market cap. The selloff followed the decision to keep long-term AI revenue outlook unchanged, disappointing investors.
3. Analyst Price Target Revisions
Citi reiterated a Buy rating with a $500 price target, while Bank of America raised its target to $530. JPMorgan lifted its target to $580 and Jefferies to $550, all citing sustained AI growth potential.
4. AI Growth Drivers and Customer Base
Broadcom expects roughly 180% AI revenue growth in fiscal 2026 and nearly 100% in fiscal 2027. AI semiconductor sales reached $10.8 billion in Q2, driven by custom chips for Anthropic, Meta, OpenAI and Google.
