Broadcom's AI Boom and $35 Billion Apollo Deal Can't Halt $291 Billion Market Cap Wipeout
05.06.2026 - 17:09:33 | boerse-global.de
Broadcom posted a blockbuster quarter that sent its AI chip sales soaring 143%, yet investors responded by wiping more than $291 billion off its market value in a single session. The disconnect between record financial performance and brutal stock reaction underscores the extreme expectations baked into AI high-fliers.
Revenue for the fiscal second quarter surged 48% year-over-year to $22.19 billion, breezing past consensus estimates. Adjusted earnings per share came in at $2.44, also topping analyst forecasts. The star performer was the AI chip business, which generated $10.8 billion in revenue — more than double the prior year's figure. CEO Hock Tan described demand as "insatiable," with the company benefiting from long-term supply deals with hyperscalers such as Google, Meta, and OpenAI.
The sell-off was triggered not by weak numbers but by a guidance that failed to raise the bar high enough. Broadcom reaffirmed its 2027 AI revenue target of $100 billion, leaving investors who had hoped for an upgrade disappointed. The stock, which had hit a 52-week high of €429.60 on the day of the earnings release, reversed sharply. Over the course of one session, the company shed approximately $291 billion in market capitalization. By the end of the week, the shares had fallen more than 8%, closing Friday at €352.30 — a 2.46% drop on the day itself.
Underpinning the disappointment was also a projected compression in gross margins. Broadcom's management expects non-GAAP gross margins to decline from roughly 77% in the previous quarter to around 74% in the third quarter. This is not a sign of weakness, the company stressed, but rather a consequence of a shifting product mix. As Broadcom ships increasing volumes of custom AI accelerators and networking components to hyperscale clients, the blended margin naturally dips. The company emphasized that on an operating margin basis, these projects remain profitable thanks to joint investment models with customers.
Should investors sell immediately? Or is it worth buying Broadcom?
Against this backdrop of investor dismay, Broadcom dropped a strategic bombshell: a partnership with Apollo and Blackstone to build a massive AI infrastructure platform. Dubbed the "AI XPV Platform," the initiative aims to deliver more than 20 gigawatts of computing capacity by 2028. Apollo is kicking off the first tranche with a $35 billion commitment. The platform is designed to enable tier-2 cloud providers and large enterprises to deploy Broadcom's AI chips at scale, with financing and infrastructure backed by the two investment firms. For Broadcom, the deal adds a layer of revenue visibility and diversifies its customer base beyond the hyperscalers.
The company's 2026 full-year AI revenue target remains around $56 billion. Meanwhile, free cash flow hit a record $10.3 billion in the second quarter. Management also announced a quarterly dividend of $0.65 per share, payable on June 30, 2026, and authorized a share buyback program of up to $10 billion through the end of 2026. These capital returns underscore the company's confidence in its cash-generation ability.
Technically, the stock still sits about 3.26% above its 50-day moving average of €341.18, and the relative strength index (RSI) of 45.6 indicates that it has moved out of overbought territory. The shares are roughly 18% below the 52-week peak.
Broadcom at a turning point? This analysis reveals what investors need to know now.
Several analysts have weighed in, arguing the sell-off was overdone. A number of investment banks raised their price targets immediately after the plunge, pointing to a valuation gap and no fundamental deterioration. The long-term supply contracts, they contend, lock in Broadcom's central role in the global AI infrastructure buildout.
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