Broadcom’s stock fell sharply in extended trading on Wednesday after the company issued guidance for its artificial intelligence (AI) chip business that fell short of investor expectations.
For its fiscal third quarter, which runs through July, Broadcom forecast $16 billion in revenue, while analysts had expected about $17.2 billion. The announcement pushed the share price down more than 10 percent, erasing over $200 billion from one of the world’s largest companies by market value.
CEO Hock Tan projected $56 billion in AI-related revenue for the fiscal year ending in October, below analysts’ $57.6 billion consensus. Although Broadcom has made progress in the AI-chip market and signed several long-term deals — including agreements with Alphabet, Anthropic, and Meta — it was unable to meet the elevated market expectations.
Mixed quarterly results but weaker forward visibility
Broadcom said it expects $29.4 billion in total revenue for the current quarter, above analysts’ average forecast of $28.6 billion. Fiscal second-quarter revenue was $22.2 billion, slightly above the $22.1 billion analysts had forecast, representing 48 percent year-on-year growth.
AI-chip sales for the period were $10.8 billion, marginally higher than the $10.7 billion expected. Despite these beats, the weaker forward outlook for AI-chip revenue dominated market reaction.
Role in major AI financing and related risks
Broadcom is also involved in financing aspects of AI infrastructure: it may backstop a $36 billion loan to Anthropic provided by Apollo Global Management and Blackstone. Under the arrangement, Anthropic purchases semiconductors developed with Google and Broadcom, which serve as collateral for the loan. Broadcom agreed to buy those chips if Anthropic does not pay and no other buyer steps forward.
Hock Tan said the deal could also help OpenAI, a rival to Anthropic, meet its compute needs.
Broader industry impact
Broadcom’s stumble had ripple effects across the chip sector. On Thursday, other AI-related semiconductor stocks declined globally: in Asia, Taiwan Semiconductor Manufacturing Company (TSMC) and South Korea’s Samsung and SK Hynix saw weaker prices, while in Europe firms such as ASML, Nokia, Infineon, and STMicroelectronics also experienced notable drops.
In sum, while some of Broadcom’s quarterly metrics topped analyst averages, its AI-chip revenue guidance disappointed the market, triggering a sharp sell-off and a wider correction across related chipmakers.
