Shares of Broadcom plunged more than 15% on Thursday, the chipmaker's biggest one-day decline since the start of 2025, after its outlook for artificial-intelligence chip sales fell short of the lofty expectations that had powered the stock. The drop wiped out a substantial slice of market value and dragged on the broader technology sector.
The reaction came despite a strong quarter. Broadcom reported revenue of $22.19 billion for its fiscal second quarter, ended 3 May, modestly above the consensus estimate of $22.13 billion, with earnings of $2.44 a share topping forecasts of $2.39. The company said its AI semiconductor revenue had roughly doubled, alongside record operating profit and free cash flow.
Investors fixated instead on the guidance. Broadcom projected AI chip sales of about $16 billion for the current quarter, below the roughly $17.2 billion analysts had penciled in, and it kept its full-year AI chip target at $100 billion rather than raising it. For a stock priced for relentless acceleration, meeting rather than exceeding expectations proved a disappointment.
The episode illustrated the high bar facing the companies at the centre of the AI boom, where valuations embed assumptions of continued hypergrowth. When even market leaders post records but decline to lift their targets, the market has often punished the shares, a pattern that has recurred across the chip sector this earnings season.
Broadcom has been one of the principal beneficiaries of the build-out of AI data centres, supplying custom accelerators and networking components to the largest cloud operators. Its results are watched closely as a barometer of demand for the infrastructure underpinning generative AI, making its cautious guidance resonate beyond the company itself.
The selloff rippled through other AI-linked names and added to the pressure on a technology sector already contending with rising bond yields. After months in which AI optimism repeatedly overpowered other concerns, Broadcom's reception suggested investors were growing more discriminating about whether the spending boom would keep outrunning expectations.