Broadcom's Record Quarter Sends Stock Tumbling as Google Chip Strategy Splits Wall Street
05.06.2026 - 17:09:33 | boerse-global.de
A rare thing happened to Broadcom last week: it shattered records and still got punished. The chip and software giant delivered a fiscal second-quarter revenue of $22.2 billion, up 48% year over year, and net income that hit $9.31 billion on a GAAP basis. Its AI chip business roared to $10.8 billion, a 143% surge. Yet the shares cratered as much as 15% in Thursday's session, wiping out roughly $300 billion in market capitalization in a single day — one of the largest one-day value destructions in U.S. corporate history.
The sell-off wasn't about disappointing numbers overall, but about the fine print in the outlook. For the third fiscal quarter, Broadcom guided total revenue to around $29.4 billion, well above the consensus range of $28.3 billion to $28.6 billion. The trouble: its forecast for AI chip sales of $16 billion fell short of the most optimistic analyst models that had been banking on $17.2 billion. Adding to the sting, the projected gross margin of approximately 74% came in significantly below the consensus of 76.8%, a gap the company attributed to product mix and the ramp of custom chips for hyperscale clients such as Google.
That margin miss opened the door for a dissenting voice on Wall Street. On June 4, Macquarie downgraded Broadcom from "Outperform" to "Neutral" and slashed its price target from $513 to $437. At the time of the downgrade, the stock was trading around €361.20, about 6% below the prior week's level. Macquarie's bearish call centers on Google's growing shift toward in-house chip production, which threatens Broadcom's role as the exclusive supplier of application-specific chips to the search giant. The bank warned that Broadcom could lose meaningful market share by 2027 as competition intensifies and pricing power erodes.
Should investors sell immediately? Or is it worth buying Broadcom?
For now, the bulk of the Street remains firmly in the bull camp. Analysts at Mizuho, Jefferies, and KeyBanc raised their targets to $530, $550, and $575 respectively, arguing that the post-earnings dip is a gap in catalysts, not a collapse in demand. Morningstar lifted its target to $650, citing Broadcom's long-term AI trajectory, while JPMorgan set a $580 target. Of the 47 analysts tracked by S&P Global, the overwhelming majority rate the stock a "Strong Buy," with a consensus price target of $511.
CEO Hock Tan is sticking to his long-range script. He reiterated that AI-related revenue should surpass the $100 billion mark by the fiscal year 2027, underpinned by current AI bookings of over $30 billion — triple the current quarterly shipment rate. The company also confirmed its full-year AI revenue guidance of $56 billion, backed by multiyear supply agreements with Google, Anthropic, OpenAI, and Meta. Shareholders will receive a quarterly dividend of $0.65 per share on June 30, 2026.
The stock has since clawed back some ground but remains under pressure. At last check it was trading at €352.50, roughly 18% below its 52-week high of €429.60. Even after the rout, the shares are up about 19% year to date, a reminder that the underlying business is still firing on multiple cylinders.
The central question hanging over Broadcom for the remainder of 2026 is whether the company can diversify its customer base fast enough to offset any potential loss of Google's custom-chip business. Most analysts believe it can. Macquarie has lost that conviction — and in doing so, it has opened a debate that is likely to shadow the stock through the next several quarters.
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