Broadcom falls as AI chip outlook disappoints investors

issued Thursday, June 4, 2026 · 08:13 AM

[WASHINGTON] Broadcom shares fell in after-hours trading after the company gave a disappointing outlook for sales of artificial intelligence chips, suggesting its efforts to establish itself in a fast-growing industry are slower than expected.

The company announced on Wednesday, June 3, that AI semiconductor sales for the third quarter of its fiscal year ending in July were US$16 billion. Analysts had expected an average of $17.2 billion, according to data compiled by Bloomberg.

CEO Tan Hock said Broadcom will sell US$56 billion in AI chips in the fiscal year ending in October. This forecast was lower than the average estimate of $57.6 billion.

The company’s pivot to artificial intelligence customers has defied high expectations from investors. Broadcom has increased its market value by about US$270 billion in the past five trading sessions before the earnings release, fueled by AI optimism.

Broadcom has expanded with long-term deals with companies including Alphabet Inc.’s Google, Anthropic PBC and Metaplatforms, but questions remain about how much revenue it will recognize each quarter, rather than on a multiyear backlog.

Against this backdrop, the latest report failed to satisfy investors, and the stock price fell more than 10% in late trading. It was up 38% this year by the end of the year.

Broadcom said total sales for the period through July are expected to be about $29.4 billion. Analysts had an average estimate of US$28.6 billion, but some forecasts ranged into billions of US dollars more.

Revenue for the fiscal second quarter ended May 3 increased 48% to $22.2 billion. Analysts’ average estimate was $22.1 billion. Earnings rose to $2.44 per share, excluding certain items. In comparison, the estimated amount was USD 2.39.

AI Semiconductor revenue was US$10.8 billion, compared to the average estimate of US$10.7 billion. This category includes custom-built accelerators, chips used to develop and run AI models, and network semiconductors.

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Tan is betting on the rapid expansion of data centers and other infrastructure, tying the company’s fortunes to AI equipment. While Nvidia remains the dominant manufacturer of AI accelerators, Broadcom is positioning itself as an important alternative.

Broadcom also plays a major role in helping fund chip purchases.

Apollo Global Management and Blackstone are working on a roughly $36 billion debt financing deal to help pay for Anthropic, the Google chip that Broadcom helped develop.

Broadcom is backstopping payments on most of the transactions, the people said. In a conference call with analysts after the earnings release, Tan said the partnership with Apollo and Blackstone will also support Anthropic’s rival OpenAI’s AI computing needs.

The CEO said the partnership will bring in more than 20 gigawatts of computing power by 2028.

Broadcom has already begun supplying chips to OpenAI and is on track for production later this year. Tan said on the conference call that the company has a deal to install 1.3 gigawatts of capacity in 2027, part of a 10 gigawatt by 2029 deal with an AI company announced last year.

The chipmaker plans to deploy 3 gigawatts of computing power to Meta through the end of 2028. Deliveries of the first 1 gigawatt order will begin late next year, Tan said. The meta deal includes both AI accelerators and networking chips. bloomberg