Broadcom shares plunge 15% on weak AI outlook, set for biggest one-day crash in over a year

Shares of Broadcom Inc crashed 15.3% on Thursday, 4 June, falling to around $406 apiece on the NYSE after the company’s fiscal second-quarter numbers and its decision not to raise its AI revenue expectations for fiscal 2026 and 2027 disappointed Wall Street investors.

If the losses are sustained through the close, it would mark the stock’s biggest single-day decline since January 2025 and could wipe out more than $300 billion from the company’s market value of about $2.268 trillion.

The sharp correction came after the stock enjoyed a strong bull run during the first five months of 2026, climbing 38% this year as of the previous close, including a 15% rally in the two weeks ahead of its earnings following strong results from rival Marvell Technology.

In just the last five trading sessions, Broadcom had added nearly $270 billion in market value, driven by continued optimism around artificial intelligence.

To be precise, the shares regained strong momentum after remaining under pressure for years before the launch of OpenAI’s ChatGPT in 2022. However, the AI-driven rally is now facing a fresh test after the company’s underwhelming outlook for AI chip revenue.

AI revenue outlook disappoints

More than the earnings itself, investor sentiment was hurt by the company’s decision to reiterate, rather than raise, its $100 billion AI revenue forecast for fiscal 2027.

Broadcom expects AI semiconductor revenue to reach $16 billion in the fiscal third quarter ending in July. Analysts, however, had projected $17.2 billion on average, according to data compiled by Bloomberg. Still, the forecast would represent more than a threefold jump from about $5.2 billion reported a year earlier.

The $100 billion forecast given in March also shows how quickly the company has gained ground in the chip race. AI revenue stood at just $20.2 billion in fiscal 2025.

The company said total revenue for the period ending in July would be about $29.4 billion, compared with analysts’ average estimate of $28.6 billion, although some projections were significantly higher.

Broadcom has signed and expanded long-term deals with companies such as Alphabet’s Google, Anthropic and Meta Platforms, but questions remain over how much of that business will be recognised as revenue each quarter instead of being reflected in a multiyear backlog.

Chief Executive Officer Hock Tan said Broadcom expects to generate $56 billion in AI chip revenue in the fiscal year ending October. That forecast also fell short of the Bloomberg-compiled analyst estimate of $57.6 billion.

In the fiscal second quarter ended 3 May, the chipmaker’s sales rose 48% to $22.2 billion, slightly ahead of analysts’ average estimate of $22.1 billion. Earnings climbed to $2.44 per share, excluding certain items, compared with expectations of $2.39 per share.

AI semiconductor revenue came in at $10.8 billion, marginally above analysts’ estimate of $10.7 billion. The segment includes custom-built accelerators used to develop and run AI models, along with networking semiconductors.

(With inputs from Bloomberg and Reuters)

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