Broadcom shares sank further on Thursday after the company topped estimates for fiscal second-quarter earnings and revenue but gave an AI chip revenue outlook for the third quarter that fell short of expectations. The move erased part of a blistering run that had added about $300 billion in market value over the previous five sessions.
The stock drop came even though Broadcom also outpaced forecasts on third-quarter guidance, a reminder that investors were focused on what the company expects from its AI business next, not just what it delivered last quarter. Shares had been up 17% year to date before the decline.
That is the part of the report that matters most to traders watching the AI trade: Broadcom can beat Wall Street on earnings and still get punished if the growth narrative looks less explosive than expected. For a company that had become one of the market’s clearest beneficiaries of AI spending, the bar was no longer just whether demand was strong, but whether it stayed strong enough to justify the pace of the rally.
Brent Schutte, who said he has 31 years of market experience, said investors are starting to test that assumption. “Well, you hear this word insatiable thrown out around quite a bit,” he said, adding, “Pay attention to the sustainability of these earnings.” He described AI money flowing through “chips to hyperscalers, to memory, to data centers, to AI servers,” and said investors should remain diversified as the value chain keeps evolving.
The sell-off also fits a broader pattern in which AI-linked names can rise hard on earnings and then stumble if the outlook is merely good instead of outstanding. Over the past month, companies including HPE, Dell, Cisco and Snowflake had strong stock gains after their reports, which has only sharpened the market’s scrutiny of whether every corner of the AI buildout can keep surprising to the upside. Broadcom’s stumble shows how quickly that enthusiasm can turn when one part of the forecast lands shy of the most aggressive hopes.
The immediate question now is not whether Broadcom remains an AI winner, but how much of that future is already priced in. After a $300 billion swing in five sessions, traders are signaling that even a company with a solid quarter can be judged on the strength of what comes next.
