Broadcom lost more than $300bn in market value after its AI forecast failed to satisfy the cocaine nose jobs of Wall Street.
According to the Financial Times, shares in the US chip outfit fell as much as 15.4 per cent in after-hours trading on Wednesday.
Broadcom guided for $29.4bn in revenue for the current quarter, beating the $28.2bn consensus from Visible Alpha but missing the most optimistic guesses.
Visible Alpha head of research Melissa Otto said: “The AI revenue guidance came in a bit light. I suspect this was the catalyst to take shares lower after hours.”
The hiding comes after chip stocks enjoyed a fat rally, helped by investors betting that AI infrastructure spending would keep the gravy train running. Broadcom had closed at a record $481.57 on Monday, giving it a market capitalisation of more than $2.3tn. If the drop holds at Thursday’s close, the company would lose about $349bn in value.
That would make it the third-biggest one-day wipeout for a US company. Broadcom’s shares had climbed more than 14 per cent during the past week after recovering from a slump near the end of March.
Its rise was part of a wider surge in US semiconductor stocks, where investors have been throwing money at anything with AI plumbing attached. The Philadelphia Semiconductor Index, which tracks 30 large US-listed chip makers, has gained more than $5tn in market value during the past two months.
Investors wanted repeated upgrades to Broadcom’s longer-term outlook, not just another respectable quarter wrapped in AI bunting.
Broadcom chief executive Hock Tan said in March that he expected well more than $100bn in AI chip revenue in 2027. Tan repeated the same figure on Wednesday, which was apparently not enough for the market’s spreadsheet priests.
The Futurum Group chief executive, Daniel Newman, said: “After a significant move upward supported by a growing sentiment for custom AI chips, Broadcom for all intents and purposes delivered another great quarter. However, clearly this was a case of running it up into earnings and selling the news.”
“Investors likely wanted to hear Hock Tan suggest that his $100bn of AI chips in 2027 had grown into something meaningfully larger,” Newman said.
Broadcom, which sells hardware and software, reported second-quarter chip revenue of $15bn, just ahead of analysts’ expectations of $14.8bn. Its total second-quarter revenue matched consensus forecasts at $22.2bn, which was not enough for punters.
The outfit has become a serious AI infrastructure player, taking on Nvidia and AMD in the market for advanced chips used to train and run AI models.
