Broadcom $AVGO drops 15% as Q3 AI chip forecast of $16B misses $17.2B consensus

Broadcom ($AVGO) tumbled 15% on June 4, 2026 — its worst single-day decline since January 2025 — after Q3 AI chip revenue guidance of $16 billion came in $1.2 billion below analyst estimates of $17.2 billion, overshadowing a clean Q2 beat on both revenue and earnings.

For Q2 FY2026, Broadcom posted revenue of $22.19 billion (+48% year-over-year), beating the $22.13 billion consensus. Non-GAAP EPS of $2.44 topped the $2.39 estimate. AI semiconductor revenue reached $10.8 billion in Q2, growing 143% year-over-year and modestly ahead of the company's own prior forecast of $10.7 billion.

Q3 FY2026 total revenue guidance of ~$29.4 billion (+84% YoY) exceeded the $28.61 billion Street estimate. But the embedded AI chip projection of $16 billion fell $1.2 billion short of ~$17.2 billion analysts had modeled. Broadcom also left its full-year AI semiconductor guidance unchanged at “in excess of $100 billion” — when the market had priced in an upward revision.

Broadcom's AI revenue is driven by custom AI accelerators (XPUs) and Ethernet-based AI networking silicon sold to hyperscalers including Google, Meta, and Amazon. The guidance miss suggests the XPU order pipeline is building more slowly than sellside models assumed — a meaningful signal given the stock's AI growth thesis ahead of earnings.

Earnings were filed as a Form 8-K with the SEC on June 3, 2026. Next catalyst: Q3 FY2026 earnings, expected September 2026.

Not investment advice. Verify all figures with primary sources before acting.