Broadcom slides after AI chip outlook disappoints investors

Published Thu, Jun 4, 2026 · 08:13 AM

[WASHINGTON] Broadcom shares fell in extended trading after the company delivered a disappointing forecast for artificial intelligence chip revenue, signalling its efforts to gain ground in the burgeoning industry are going more slowly than anticipated.

AI semiconductor revenue will be US$16 billion in the fiscal third quarter, which runs to July, the company said on Wednesday (Jun 3). Analysts predicted US$17.2 billion on average, according to data compiled by Bloomberg.

CEO Tan Hock said that Broadcom will sell US$56 billion in AI chips in the fiscal year that ends in October. That forecast fell short of the average estimate of US$57.6 billion.

Though the company is making headway in pivoting to artificial intelligence customers, it’s up against outsized investor expectations. Broadcom added roughly US$270 billion in market value over the last five trading sessions before the earnings report, fuelled by AI optimism.

Broadcom has signed and expanded long-term deals with companies such as Alphabet’s Google, Anthropic PBC and Meta Platforms, but questions remain about how much revenue will be recognised in each quarter, as opposed to being accounted for in a multiyear backlog.

Against that backdrop, the latest report failed to satisfy investors, with the stock falling more than 10 per cent in late trading. It was up 38 per cent this year through the close.

Total revenue in the period ending in July will be about US$29.4 billion, Broadcom said. While analysts estimated US$28.6 billion on average, some projections ranged billions of US dollars higher.

In the fiscal second quarter, which ended May 3, sales rose 48 per cent to US$22.2 billion. Analysts had projected US$22.1 billion on average. Earnings climbed to US$2.44 a share, excluding some items. That compared with an estimate of US$2.39.

AI semiconductor revenue was US$10.8 billion, compared with an average estimate of US$10.7 billion. That category includes custom-built accelerators, the chips used to develop and run AI models, as well as networking semiconductors.

Tan has tied the company’s fortunes to AI gear, betting on a rapid expansion of data centres and other infrastructure. While Nvidia remains the dominant maker of AI accelerators, Broadcom has positioned itself as a key alternative.

Broadcom is also taking a bigger role in helping finance the purchase of chips.

Apollo Global Management and Blackstone are working on a roughly US$36 billion debt financing deal to help Anthropic pay for its Google chips that Broadcom helped develop.

Broadcom is backstopping payments on the largest portions of the transaction, sources familiar with the matter have said. On a conference call with analysts after the results were released, Tan said that the arrangement with Apollo and Blackstone will also help Anthropic’s rival OpenAI with its AI computing demand.

The CEO said that the partnership will deploy more than 20 gigawatts of computing capacity till 2028.

Broadcom has already begun delivering chips to OpenAI and is on track for production later this year. The chipmaker has a contract to deploy 1.3 gigawatts of capacity in 2027, Tan said on the call, part of an agreement announced last year with the AI company for 10 gigawatts by 2029.

The chipmaker will deploy three gigawatts of computing power for Meta through the end of 2028. An initial order of one gigawatt will begin delivery in the second half of next year, Tan said. The Meta deal includes both AI accelerators and networking chips. BLOOMBERG