Broadcom’s Blockbuster Quarter Can’t Shake Fears Over Google’s Retreat and Steady AI Targets

Investors sent Broadcom shares into a steep tailspin last week, wiping out more than $300 billion in market value even as the company delivered a record quarter that handily beat profit and revenue estimates. The stock closed at €336.75 on Friday, down 6.61% on the day and 12.25% for the week, leaving it 21.6% below its 52-week high of €429.60 reached just days earlier on June 3.

The selloff unfolded despite what looked like a flawless earnings report. Second-quarter revenue surged 48% year over year to $22.18 billion, while adjusted earnings per share of $2.44 cleared analyst projections. The artificial-intelligence chip business, the company’s primary growth engine, generated $10.8 billion in revenue — a 143% jump and well above internal forecasts. For the current quarter, management guided for total revenue of around $29.4 billion, again topping consensus, with AI chip sales alone expected to hit about $16 billion, representing growth of more than 200%.

Two underlying factors soured the mood on Wall Street. First, chief executive Hock Tan declined to raise Broadcom’s long-term AI revenue targets, reaffirming the existing forecasts of $56 billion for fiscal 2026 and over $100 billion for fiscal 2027. Investors who had been betting on an upward revision — especially given the frenzied pre-earnings rally — took the absence of a raise as a signal that the pace of acceleration may be leveling off. Second, the company disclosed a strategic pivot: Broadcom will now supply only chips rather than complete AI systems, a move that some analysts interpret as a margin concession or a response to shifting customer preferences.

The more acute pressure came from a downgrade by Macquarie, which cut Broadcom to Neutral from Outperform and slashed its price target to $437. Analyst Arthur Lai pointed to Google’s plans to ramp up in-house chip production in partnership with MediaTek. Macquarie estimates that Broadcom’s share of Google’s Tensor Processing Unit business will shrink from roughly 95% currently to 65% by 2028. The dependency on a single key customer has long been a risk flagged by bears, and the downgrade crystallized that concern.

Should investors sell immediately? Or is it worth buying Broadcom?

Yet the broader analyst community largely sees the selloff as overdone. JPMorgan raised its price target to $580 from $500 and reiterated Broadcom as a “top pick.” Jefferies lifted its target to $550, Mizuho to $530, and Deutsche Bank to $515 — all maintaining buy-equivalent ratings. The bull case rests on Broadcom’s expanding customer base: the company now serves six major accounts for custom chips, including Anthropic, Meta, and OpenAI. During the second quarter, it booked $30 billion in AI-related orders, and the pipeline continues to build.

Technically, the stock has slipped just below its 50-day moving average, while the relative strength index has cooled to 41, nearing oversold territory. The broader semiconductor selloff compounded the damage: the PHLX Semiconductor Index fell more than 10% on the day, its steepest single-session loss since March 2020, dragging down peers such as Nvidia, Micron, and TSMC.

For all the noise, Broadcom shares remain up 13.5% year to date and 48% over the past twelve months. The real test will come when the company reports fiscal third-quarter results and investors can judge whether the massive new orders from Meta and OpenAI are enough to offset Google’s gradual retreat. Until then, the market has delivered its verdict: a brilliant quarter, but not brilliant enough.