Broadcom Inc.

🇺🇸NASDAQ Global Select
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Broadcom Inc. stock analysis AVGO overview
Slightly Bearish -15

Broadcom’s chip forecast disappoints

📉 Broadcom's second-quarter revenue of US$22.19 billion missed Wall Street estimates of US$22.27 billion.

📊 The company also forecast third-quarter AI chip revenue of US$16 billion, slightly below analyst expectations of US$16.36 billion.

🤖 Broadcom is intensifying its competition with Nvidia, whose graphics processing units remain the industry standard for AI workloads.

👔 CEO Hock Tan maintained the long-range forecast of US$100 billion in sales from AI chips by 2027 despite a slight increase in expected shipments.

📉 Broadcom shares fell more than 13% in extended trading after the disappointing earnings report and unchanged long-term outlook.

⚠️ Rival Marvell Technology is gaining market share with key hyperscale customers, projecting its custom chip business to exceed US$10 billion by 2029.

🔗 Supply chain concerns were addressed by executives who stated the company is "very comfortable" securing supply for 2026 and 2027.

💬 Analyst Ryan Lee noted that the market demands perfection for the current chip rally to continue following the revenue miss.

📈 Broadcom's third-quarter revenue forecast of US$29.4 billion actually beat analyst estimates averaging US$28.54 billion.

🤝 The company maintains a robust core business with strong lead positions among hyperscale customers like Meta and Alphabet.

💰 Big Tech firms are expected to spend over US$700 billion on AI infrastructure this year, up from around US$400 billion in 2025.

🚀 Broadcom plans to ship 10GW of compute capacity next year with significantly more planned for 2028.

📈 Second-quarter semiconductor revenue from AI reached US$10.8 billion, representing a 143% year-on-year growth.

🔍 This growth was driven by increasing demand for custom AI accelerators and AI networking solutions.

Bullish Signals
  • Broadcom's AI chip revenue for the second quarter reached US$10.8bil, representing a 143% year-on-year growth that exceeded company forecasts.
  • The company secured supply for its AI chips through 2026 and 2027, alleviating concerns about strained supply chains.
  • Analysts view Broadcom's core business as robust due to its leading position in the custom chip market with major hyperscale customers like Meta and Alphabet's Google.
  • Big Tech firms are expected to spend more than US$700bil on AI infrastructure this year, up from around US$400bil in 2025, indicating strong demand.
  • CEO Hock Tan plans to ship 10GW worth of compute capacity next year with even greater volumes planned for 2028.
Risk Factors
  • Broadcom's second-quarter revenue of US$22.19 billion missed Wall Street estimates of US$22.27 billion.
  • The company's shares fell more than 13% in extended trading following the disappointing earnings report.
  • Rivals such as Marvell Technology are gaining ground with key hyperscale customers, posing a competitive threat.
  • The market demands perfection for the AI chip rally to continue, as evidenced by the significant stock decline after a minor revenue miss.
Full Analysis
Broadcom reported second-quarter revenue of US$22.19 billion, missing Wall Street estimates of US$22.27 billion, which caused its shares to fall more than 13% in extended trading. The company also provided a third-quarter revenue forecast of approximately US$29.4 billion, exceeding analyst expectations of US$28.54 billion, though it noted that AI chip revenue for the quarter would be slightly below estimates at US$16 billion compared to US$16.36 billion. CEO Hock Tan maintained the long-range sales forecast of US$100 billion in AI chip sales by 2027 and increased the expected shipment volume to more than 10GW, citing robust demand for custom AI accelerators and networking solutions from major hyperscale customers like Meta and Google. Despite the short-term miss, analysts view Broadcom's core business as strong due to its dominant position in the custom chip market, with AI semiconductor revenue growing 143% year-on-year to US$10.8 billion. The company addressed supply chain concerns by confirming it is "very comfortable" securing supply for 2026 and 2027, while acknowledging that rivals like Marvell Technology are gaining ground with key customers. Industry spending on AI infrastructure is projected to exceed US$700 billion this year, up from around US$400 billion in 2025, highlighting the continued strategic importance of Broadcom's role in the sector despite competitive pressures and market expectations for perfection.