Broadcom Inc. (NASDAQ:AVGO) delivered blockbuster second-quarter financial results driven by artificial intelligence (AI) demand, yet its stock tumbled overnight as investors balked at management’s unchanged long-term forecast.
Sky-High Milestones Reiterated
During the earnings call, Broadcom President and CEO Hock Tan confirmed that the chipmaker’s explosive momentum shows no signs of slowing down. For fiscal year 2026, the company expects to achieve AI semiconductor revenue of $56 billion, representing an approximate 180% increase from the previous year.
Looking further ahead, Tan firmly backed the company’s aggressive targets for the following fiscal year.
“We reiterate our AI semiconductor revenue guidance to be in excess of $100 billion,” Tan stated. He emphasized his confidence in the trajectory, adding, “I think you will easily see that 2027 will exceed very easily $100 billion in 2027. Which is pretty much what we indicated last quarter.”
Unprecedented Visibility And Backlog
Driven by deep partnerships with hyperscalers like Alphabet Inc.‘s (NASDAQ:GOOG) (NASDAQ:GOOGL) Google, Meta Platforms Inc. (NASDAQ:META), OpenAI, and Anthropic, Broadcom is securing orders years in advance.
Tan revealed a dramatic extension in customer commitments, noting that “our visibility runs all the way to 2028 right now. Just 3 months ago, I can tell you visibility ran pretty much to 27. Today, it runs to 2028.”
The sheer volume of these multi-year commitments led JPMorgan analyst Harlan Sur to question the staggering magnitude of the company’s forward order book. Sur asked management, “Is it fair to assume that your 18-month backlog sits at $200 billion or better?”
Tan responded by affirming that the company is on track to ship “10 gigawatts in 2027. Nothing has changed. Back half loaded. Which really provides an interesting trajectory into 2028.”
The Expectations Trap
Despite reporting a record second-quarter revenue of $22.2 billion—up 48% year-over-year—and stellar AI booking figures, Broadcom’s stock dropped sharply following the announcement.
Wall Street, having already priced in absolute perfection, was hunting for an official guidance upgrade rather than a reiteration of past targets.
By failing to lift the $100 billion floor for 2027, Broadcom fell victim to the tech sector’s sky-high expectations, proving that even record-breaking AI growth sometimes isn’t enough to satisfy hungry traders.
How Has AVGO Performed In 2026?
In comparison with the Nasdaq 100’s 21.28% year-to-date advance, shares of AVGO have advanced by 38.47% over the same period. It closed 0.49% lower at $479.23 apiece on Wednesday, and it was down 11.05% in overnight trading.
Over the last month, AVGO stock was up 13.76%, and it rose 25.91% and 86.58% over the last six months and the year, respectively. Benzinga’s Edge Stock Rankings indicate that AVGO maintains a strong price trend in the long, medium, and short terms, with a moderate growth score.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
Photo courtesy: Piotr Swat / Shutterstock
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