Broadcom Stock Falls 4% Despite Record $22.19B Revenue, 143% AI Surge
In brief
- Broadcom posted $22.19B Q2 revenue, up 48% YoY, beating Wall Street consensus
- AI chip revenue hit $10.8B, up 143%, now representing 49% of total sales
- Stock fell 4% despite earnings beat and guidance raise after initial 8% drop
- CEO projects $16B Q3 AI revenue and targets $100B annual AI revenue by end of 2027
Record Quarter, Market Skepticism
Broadcom reported fiscal second-quarter 2026 revenue of $22.19 billion, a 48% increase year-over-year. The figure exceeded the Wall Street consensus estimate of roughly $22.13 billion. Adjusted earnings per share landed at $2.44, edging past the $2.40 analysts had penciled in.
The real headliner was AI. Broadcom's AI semiconductor revenue hit $10.8 billion for the quarter, representing a 143% increase year-over-year. That means AI now accounts for roughly 49% of total sales. In the prior quarter (Q1 FY2026), AI chip revenue was $8.4 billion, which itself represented 106% growth. The acceleration is real.
Yet the market punished the stock. Shares initially plunged nearly 8% before recovering to a roughly 4% decline. Earnings beats and record revenue typically don't trigger selloffs. The divergence signals investor concern about what comes next.
Guidance and the Growth Question
CEO Hock Tan isn't backing down. He projected AI semiconductor revenue north of $16 billion in the fiscal third quarter. If that number holds, it would represent approximately 200% growth year-over-year. At scale, that's a staggering claim.
Broadcom's ambitions extend further. The company is targeting over $100 billion in annual AI chip revenue by the end of 2027. For context, Broadcom's AI-related backlog exceeded $70 billion as of the first fiscal quarter of 2026. The backlog supports near-term growth, but Wall Street appears skeptical that 200% quarters can persist.
Broadcom's client list includes Google, Meta, Anthropic, and OpenAI. These are the companies driving AI infrastructure buildout. Demand is there. The question isn't whether AI chips matter — it's whether Broadcom can maintain triple-digit growth while doubling revenue again by year-end 2027.
