Broadcom Plunges 14% on Q2 Revenue Miss, Steady AI Outlook
Broadcom missed revenue estimates in its fiscal Q2 and saw shares plunge 14% after holding its $100 billion AI chip sales forecast for 2026 unchanged. The results highlight softening software sales even as AI revenue more than doubled and is expected to triple in the current quarter.
Broadcom misses revenue estimates in fiscal Q2. The company recorded revenue of $22.19 billion, below the $22.27 billion LSEG consensus estimate. Adjusted earnings per share came in at $2.44, topping the $2.40 forecast.
Revenue climbed 48% from $15 billion in the same quarter a year earlier. Net income increased 88% to $9.31 billion, or $1.91 per share.
Hock Tan did not raise the full-year target of $100 billion in AI semiconductor sales for 2026.
AI revenue more than doubles with tripled quarterly guidance. AI revenue reached $10.8 billion in the quarter, more than double the prior-year figure. Broadcom expects AI revenue to triple to $16 billion in the current quarter.
The company helps technology firms build custom AI chips and has attracted attention from cloud providers designing their own silicon. It counts six core custom chip customers including Anthropic, Google, Meta and OpenAI.
Software sales miss expectations and weigh on results. Infrastructure software revenue totaled $7.18 billion, up 9% annually but short of the $7.32 billion analysts expected. This unit includes products from the 2023 VMWare acquisition.
Semiconductor solutions revenue hit $15.1 billion, exceeding the $14.72 billion StreetAccount estimate. That division includes AI accelerators, networking parts and Wi-Fi chips.
Tan said Broadcom would offer "chips only" instead of the complete integrated AI systems it had previously planned to provide.
CEO holds AI forecast steady and shifts delivery approach. Hock Tan did not raise the full-year target of $100 billion in AI semiconductor sales for 2026. He stated the company expects momentum to continue into fiscal 2027 and reiterated guidance for AI semiconductor revenue in excess of $100 billion.
Tan said Broadcom would offer "chips only" instead of the complete integrated AI systems it had previously planned to provide. In December, he disclosed that Anthropic had placed a $10 billion order for AI chips.
Current-quarter revenue guidance beats Wall Street views. Broadcom projected revenue of about $29.4 billion for the current quarter, above the $28.53 billion expected by analysts. Shares are up close to 40% this year, outperforming the Nasdaq's 16% gain, and have multiplied almost ninefold since the end of 2022.
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