- Broadcom lost over $300 billion in market value. Shares fell as much as 15.4% in after-hours trading.
- Broadcom’s AI revenue guidance fell short of investor expectations.
- The company also failed to increase its AI semiconductor sales forecast for 2
Broadcom has lost over $300 billion in market value, with shares dropping in after-hours trading on Wednesday. This followed its AI revenue guidance falling short of investor expectations.
Share value dropped as much as 15.4% hours after Broadcom gave guidance of $29.4 billion in revenue for the current quarter, above consensus estimates of $28.2 billion, but falling short of the highest estimates, Financial Times revealed.
If the chip company's loss holds at the closing bell on Thursday, it would be equal to a decline of almost $349 billion in market value, making it the third-biggest wipeout on record for an American company, as per FT's analysis.
For the second quarter, Broadcom reported revenue of $22.19 billion, slightly exceeding the consensus predictions of $22.13 billion. Earnings per share were $2.44, above estimates of $2.39.
Semiconductor revenue from AI in the second quarter jumped 143% year over year.
But, Broadcom projected AI chip sales for the third quarter at $16 billion, below analysts' expectations of $17.2 billion, as per Yahoo! Finance.
The company also failed to raise its AI semiconductor sales forecast for 2026.
Broadcom chief executive Hock Tan reiterated that he expected over $100 billion in 2027 from AI chip revenue.
He also guided third-quarter consolidated revenue to $29.4 billion, estimating year-on-year growth of 84%. Tan increased the full-year AI semiconductor revenue forecast to $56 billion, a hike of almost 180% from the last fiscal year, Euronews reported.
It was not enough. The fall in Broadcom's stock highlighted the investors' disappointment with regards to repeated upwards revisions in the company's longer-term outlook.
Broadcom, which sells both hardware and software, recently reached a market capitalisation of over $2.3 trillion. The firm is expected to benefit from hyperscaler AI spending this year, which is estimated to touch $650 billion. Google, Meta, Anthropic and OpenAI are among Broadcom's customers.
The California-based company is competing with AMD and Nvidia to offer advanced semiconductors for training and running AI models.
Broadcom's guidance affected Asian markets as well, which opened sharply lower on Thursday. Semiconductor and technology stocks bore the brunt of the sell-off.
Questions remain over whether Big Tech companies will be able to continue their spending on AI. Broadcom's guidance and the Google $85 billion equity sale to fund its infrastructure plans offer no clear answers.
