Overview
- Broadcom reported record fiscal Q2 results on June 3 with $22.2 billion in revenue and AI semiconductor sales up 143% to $10.8 billion, driven by custom chips and networking for hyperscale cloud customers.
- The company disclosed AI order bookings above $30 billion and guided Q3 AI semiconductor revenue to about $16 billion while reaffirming a target of more than $100 billion in AI revenue by fiscal 2027.
- Investors punished guidance that met rather than exceeded already elevated expectations, sending the stock down more than 20% from recent highs in the days after the earnings release.
- Management warned that consolidated gross margin will fall as AI hardware takes a larger share of sales, but operating margin and free cash flow hit record levels because software and operating leverage remain strong.
- Analysts largely kept Buy ratings and raised many price targets while flagging risks from customer concentration, supply constraints and the company’s capacity and financing plans with partners such as Apollo and Blackstone.