Broadcom's Cash Engine Roars to $10.5B, but Macquarie's Google Warning Sours the Afterglow
05.06.2026 - 18:30:02 | boerse-global.de
A record-breaking quarter for Broadcom was supposed to be a moment of triumph. Instead, the stock has slumped nearly 10% in a week, and one of Wall Street’s most respected shops just tore up its buy rating. The contradiction is rooted not in the numbers themselves, but in what they imply about the company’s long-term grip on its biggest customer.
For the period ended May 3, 2026, Broadcom generated $10.5 billion in operating cash flow and $10.26 billion in free cash flow – a 60% jump from a year earlier and a margin of 46% on revenue. Total revenue soared 48% to $22.19 billion, with adjusted EBITDA of $15.24 billion representing a stunning 69% of sales. Net income under GAAP was $9.31 billion. The board also confirmed a quarterly dividend of $0.65 per share, payable June 30 to holders of record on June 22.
Yet the market response was cold. The stock, which had hit a 52-week high of €429.60 on the day of the earnings release, has since given back nearly 20%. By Friday, shares were changing hands around €344.00, a 5% daily decline and a 10% weekly loss. Even so, the 200-day moving average of €306.31 sits more than 12% below the current price, and the shares remain 51% higher over the past twelve months.
The disconnect stems from the third-quarter outlook. Chief Executive Hock Tan guided for total revenue of approximately $29.4 billion, which would represent 84% year-on-year growth. However, Reuters reported that both the top-line forecast and the AI chip projection came in slightly below analyst estimates. In today’s AI infrastructure market, “good enough” is no longer rewarded.
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The AI segment itself continues to be a powerhouse. Broadcom reported $10.8 billion in AI-related revenue during the second quarter, up 143% and above the company’s own forecast. For the current quarter, management expects that figure to climb to $16 billion – more than triple the prior-year level. The full-year AI revenue guidance was reaffirmed at $56 billion, and the 2027 target of over $100 billion was reiterated.
Nevertheless, Macquarie struck a dissonant chord on June 4, downgrading Broadcom from “Outperform” to “Neutral” and slashing its price target from $513 to $437. The rationale: Google, Broadcom’s largest customer for custom AI chips, is increasingly bringing chip production in-house. Macquarie anticipates a meaningful loss of market share by 2027, compounded by rising competition and margin pressure.
That bearish call stands in stark contrast to the Wall Street consensus. Of the 47 analysts tracked by S&P Global, a strong majority still rate the stock a “Buy,” and the average price target is $511. Mizuho lifted its target to $530, Jefferies to $550, and KeyBanc to $575. The bull case rests on Broadcom’s diversified customer base and multi-year supply agreements with the likes of Google, Anthropic, OpenAI, and Meta. Those contracts, they argue, provide revenue visibility that a single customer shift cannot quickly erode.
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Segment data underscores both the growth and the dependence. The semiconductor division contributed $15.01 billion in revenue, or 68% of the total, surging 79% year-on-year. Infrastructure software added $7.18 billion, but grew just 9%. Software provides stability, but little of the growth narrative that commands a premium multiple – and that leaves the stock exposed to every whisper about AI spending cycles.
For the third quarter, Broadcom expects an operating margin of 67%. With cash reserves swelling to $19.6 billion, the balance sheet offers ample cushion. Whether the shares can recover their highs, however, will depend on whether Broadcom can beat that $29.4 billion bar and convince investors that no single customer is irreplaceable.
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