Broadcom‘s Broadcom AI guidance miss on Q3 AI chip sales erased roughly $300 billion in market cap gains accumulated over the seven trading days before its fiscal Q2 2026 report, sending NASDAQ-listed AVGO down approximately 13% the day after results landed.
| Metric | Result | Estimate |
|---|---|---|
| Q2 Revenue | $22.19B (+48% YoY) | $22.13B |
| Q2 Adj. EPS | $2.44 (+54% YoY) | $2.40 |
| Q2 Adj. EBITDA Margin | 69% | 68.6% |
| Q3 Revenue Guidance | $29.4B (+84% YoY) | $28.25B |
| Q3 AI Semi Guidance | $16.0B (+200% YoY) | $17.2B |
| Full-Year 2026 AI Semi Outlook | $56B (~+180% YoY) | — |
Headline numbers were fine. Revenue of $22.19 billion beat estimates by about $60 million. Adjusted EPS of $2.44 came in four cents above consensus. The adjusted EBITDA margin of 69% cleared both company guidance of 68% and the Street’s 68.6% target.
According to Broadcom’s Q2 FY2026 8-K filing, GAAP net income came in at $9.3 billion, with non-GAAP net income reaching $12.1 billion. Neither figure was the problem.
What the Broadcom AI Guidance Miss Means for Q3
The Broadcom AI guidance miss centers on one number: $16 billion in projected Q3 AI semiconductor revenue. That represents 200% growth year-over-year. It still missed Wall Street’s $17.2 billion expectation by roughly $1.2 billion, a gap wide enough to matter when the stock had priced in perfection.
Per the Q2 earnings call transcript, Broadcom’s Semiconductor Solutions segment posted record revenue of $15 billion in the quarter, up 79% year-over-year, driven almost entirely by AI. The non-AI semiconductor slice of Q3 guidance sits at approximately $4.5 billion, up 12% year-over-year. Solid, but not a needle-mover at this scale.
The full-year 2026 AI semiconductor outlook sits at $56 billion, up roughly 180% from fiscal 2025. That figure did not move higher. CEO Hock Tan held the 2027 long-range target at “more than $100 billion,” brushing aside JPMorgan analyst Harlan Sur’s attempt to get a more specific forecast. Tan’s line on the call: “We’re not trying to guide you every quarter on what 2027 would be like.”
Broadcom guides conservatively and moves when it has something concrete to say. That discipline can look like a disappointing non-answer when shares have already priced in a big upgrade.
Marvell Set a High Bar, Alphabet Diversification Adds Uncertainty
Part of the setup was competitive. Marvell Technology said in late May 2026 that its custom chip business would exceed $10 billion in revenue by 2029, and beat its own Q2 revenue guidance. That raised the implied bar for Broadcom.
Then came the Alphabet question. Broadcom confirmed it extended its long-term partnership to develop Alphabet’s tensor processing units. But Tan acknowledged publicly that Alphabet will likely use multiple TPU suppliers, including MediaTek. “We fully expect that there will be some diversity of sources for them,” he said. That is a notable admission: Broadcom is not Alphabet’s exclusive AI chip partner, and the market noticed.
Still, the Q3 revenue guide of $29.4 billion, up 84% year-over-year, cleared the $28.25 billion consensus by a meaningful margin. That 84% growth rate would rank as the second-highest quarterly expansion for Broadcom since 2017.
Post-Earnings Moves Signal Broader Strategy Pivot
After the sell-off, Broadcom disclosed a separate strategic development. On June 9, 2026, the company announced alongside Apollo and Blackstone a platform targeting more than 20 gigawatts of global AI infrastructure deployment, according to Broadcom investor relations. The company also released a Private Cloud Outlook 2026 report the same day, framing production AI inference as shifting decisively to private cloud environments.
Those announcements do not fix the near-term AI guidance gap. But they sketch a longer investment thesis that extends well beyond the quarterly chip order cycle.
AVGO was trading near $402, about 19% below its 52-week high of $495. The consensus price target sits at $490.13 with a Moderate Buy rating. A revision to the full-year $56 billion AI revenue target, upward or downward, is now the most likely near-term catalyst to reset sentiment on the stock.
