Broadcom Shares Plunge 12% Despite $10.8B AI Sales and Raised Guidance
The company reported Q2 AI semiconductor sales of $10.8B and raised its Q3 guidance, yet shares plunged 12% after missing revenue estimates. Deutsche Bank lifted its price target from $430 to $515, citing resilient AI demand offsetting margin headwinds from lower-margin hardware mix.
1. Q2 Earnings and Share Reaction
The company reported Q2 results that beat EPS expectations but missed revenue views, triggering a 12% decline in premarket trading as investors reassessed valuation.
2. AI Demand and Guidance Lift
AI semiconductor sales reached $10.8B in Q2, and management raised Q3 guidance, projecting continued strength into 2027 driven by custom accelerators and networking demand.
3. Price Target Increase
Deutsche Bank raised its price target from $430 to $515 on expectations that resilient AI spending and guidance justify higher valuation.
4. Margin Headwinds
A mix shift toward lower-margin AI hardware is applying pressure on gross margins and working capital, highlighting potential near-term profitability challenges.
