Why Is Broadcom (AVGO) Stock Down -15% Today?
Key Takeaways
- Broadcom (AVGO) shares are down approximately 15% on June 4, 2026, after closing at $479.23 on June 3, with shares trading as low as $405.51 intraday
- The primary catalyst is investor disappointment following Broadcom's Q2 fiscal 2026 earnings release: Q3 AI chip revenue guidance of $16 billion fell short of analyst expectations of $17.2 billion
- CEO Hock Tan declined to raise the company's widely-anticipated annual AI semiconductor revenue target, reaffirming but not upgrading the $100 billion benchmark for fiscal 2027
- Enterprise software revenue came in below StreetAccount estimates, adding a secondary layer of disappointment
- The stock had rallied nearly 40% year-to-date and hit multiple all-time highs in the days leading up to earnings, creating an exceptionally high bar
- Traders are now watching whether the sell-off stabilizes around key technical support and whether analysts revise price targets in the coming sessions
Opening Summary
Broadcom Inc. (AVGO) is a global semiconductor and infrastructure software powerhouse, best known for designing custom AI accelerator chips (XPUs and ASICs) for hyperscale cloud operators, as well as networking silicon and enterprise software — including the VMware platform it acquired in 2023. On Wednesday, June 3, 2026, AVGO closed at $479.23. In Thursday's trading session on June 4, shares dropped approximately 15%, falling as low as $405.51, as investors reacted sharply to an earnings report that, while technically ahead on EPS, missed the sky-high expectations the market had built in during a multi-week pre-earnings rally. The sell-off reflects not a failed quarter, but a forward guidance picture that simply did not match what bulls had priced in.
Earnings Beat, But Guidance Disappointed
Broadcom reported Q2 fiscal 2026 adjusted EPS of $2.44, ahead of the consensus estimate of $2.39–$2.40. Revenue came in at $22.19 billion, a 48% jump year-over-year, though this narrowly missed some analysts' estimates of $22.27 billion. On the surface, the company also raised its Q3 revenue guidance to $29.4 billion, topping Wall Street's $28.53–$28.61 billion consensus.
However, the detail that rattled markets most was AI chip revenue guidance for the upcoming quarter: Broadcom projected $16 billion in Q3 AI semiconductor revenue, below analyst expectations of $17.2 billion. For a stock that had been riding AI optimism to record highs, even a small miss on the forward AI number proved more than enough to trigger aggressive selling. Net income did surge 88% year-over-year to $9.31 billion, but the market's focus remained squarely on AI trajectory.
The $100 Billion AI Target Left Untouched
The most consequential moment of the earnings call may have been what CEO Hock Tan did not say. Investors had broadly expected Tan to raise Broadcom's $100 billion annual AI semiconductor revenue target for fiscal 2027, given that Q2 AI revenue had already surged 143% year-over-year to $10.8 billion and AI bookings exceeded $30 billion. Instead, Tan simply reaffirmed the existing target: "We expect this momentum to persist into fiscal year 2027 and reaffirm our guidance for AI semiconductor revenue to exceed $100 billion."
In a market environment where AI growth stories are expected to continuously upgrade their outlooks, a reaffirmation read as a ceiling rather than a floor. "The expectations were quite elevated going into this report, and I think the reaction you're observing in the shares reflects that," said Angelo Zino, senior vice president at CFRA Research.
Software Segment Miss Amplifies the Selloff
Beyond semiconductors, Broadcom's enterprise software division — anchored by VMware — reported revenue that came in below StreetAccount analyst estimates. While the segment continued to grow, the shortfall added a second front of disappointment. Investors have been watching the VMware integration closely as a key pillar of Broadcom's non-chip revenue diversification strategy, and any stumble in that segment tends to raise questions about the longer-term earnings mix.
High Expectations Built Into a Record-High Stock
Context matters here. AVGO shares had climbed nearly 40% year-to-date through Wednesday's close, outpacing the Nasdaq's 16% gain over the same period. In the five trading sessions before earnings, the stock hit several all-time highs as investors aggressively positioned for what they anticipated would be a blowout report with upward AI guidance revisions. That positioning created a classic "buy the rumor, sell the news" setup, where even a credible beat-and-raise quarter could not satisfy the premium valuation the stock had accumulated.
Market Context and Trading Activity
Volume on June 4 surged dramatically, with AVGO trading as low as $405.51 — a level not seen in recent weeks — before recovering slightly toward $422. The prior session on June 3 had already drawn over 50 million shares in volume, more than double the average, as traders positioned ahead of the report. Semiconductor-focused ETFs including SMH and SOXX faced sympathy pressure given Broadcom's substantial index weighting. Despite the selloff, analyst sentiment remained broadly constructive — Deutsche Bank, for instance, actually raised its price target on AVGO to $515 on June 4, maintaining a Buy rating. From a technical standpoint, the break below the $420–$430 range threatens key support levels that had underpinned the stock's multi-month rally.
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What Comes Next for AVGO
The next major scheduled catalyst for AVGO is its fiscal Q3 2026 earnings report, expected around early September 2026, where investors will scrutinize whether AI semiconductor revenue is tracking toward or above the $16 billion quarterly guidance. Any upward revision to the $100 billion annual AI target — or a new, higher multi-year benchmark — would likely be the most powerful re-rating catalyst for the stock. Hyperscaler capital expenditure updates from Google, Meta, Microsoft, and Amazon will also be closely tracked, as Broadcom's custom ASIC business is directly dependent on their AI infrastructure investment cycles.
On the software side, continued VMware enterprise retention metrics and contract renewal rates will be watched carefully. With 43 buy ratings and only 1 hold among covering analysts as of the most recent data, Wall Street's long-term conviction in AVGO remains largely intact — but near-term sentiment has clearly shifted following the earnings-driven move, and valuation multiples will need time to reset. Key risks include semiconductor export restrictions, a potential pullback in hyperscaler AI spending, and broader macro uncertainty.
Disclaimer
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Momentum Indicator for AVGO turns positive, indicating new upward trend
AVGO saw its Momentum Indicator move above the 0 level on May 27, 2026. This is an indication that the stock could be shifting in to a new upward move. Traders may want to consider buying the stock or buying call options. Tickeron's A.I.dvisor looked at 84 similar instances where the indicator turned positive. In of the 84 cases, the stock moved higher in the following days. The odds of a move higher are at .
Technical Analysis (Indicators)
Bullish Trend Analysis
The Moving Average Convergence Divergence (MACD) for AVGO just turned positive on June 01, 2026. Looking at past instances where AVGO's MACD turned positive, the stock continued to rise in of 54 cases over the following month. The odds of a continued upward trend are .
Following a 3-day Advance, the price is estimated to grow further. Considering data from situations where AVGO advanced for three days, in of 353 cases, the price rose further within the following month. The odds of a continued upward trend are .
The Aroon Indicator entered an Uptrend today. In of 315 cases where AVGO Aroon's Indicator entered an Uptrend, the price rose further within the following month. The odds of a continued Uptrend are .
Bearish Trend Analysis
The RSI Indicator has been in the overbought zone for 2 days. Expect a price pull-back in the near future.
The Stochastic Oscillator has been in the overbought zone for 2 days. Expect a price pull-back in the near future.
Following a 3-day decline, the stock is projected to fall further. Considering past instances where AVGO declined for three days, the price rose further in of 62 cases within the following month. The odds of a continued downward trend are .
AVGO broke above its upper Bollinger Band on May 29, 2026. This could be a sign that the stock is set to drop as the stock moves back below the upper band and toward the middle band. You may want to consider selling the stock or exploring put options.
Fundamental Analysis (Ratings)
The Tickeron Profit vs. Risk Rating rating for this company is (best 1 - 100 worst), indicating low risk on high returns. The average Profit vs. Risk Rating rating for the industry is 59, placing this stock better than average.
The Tickeron Price Growth Rating for this company is (best 1 - 100 worst), indicating outstanding price growth. AVGO’s price grows at a higher rate over the last 12 months as compared to S&P 500 index constituents.
The Tickeron SMR rating for this company is (best 1 - 100 worst), indicating very strong sales and a profitable business model. SMR (Sales, Margin, Return on Equity) rating is based on comparative analysis of weighted Sales, Income Margin and Return on Equity values compared against S&P 500 index constituents. The weighted SMR value is a proprietary formula developed by Tickeron and represents an overall profitability measure for a stock.
The Tickeron Seasonality Score of (best 1 - 100 worst) indicates that the company is fair valued in the industry. The Tickeron Seasonality score describes the variance of predictable price changes around the same period every calendar year. These changes can be tied to a specific month, quarter, holiday or vacation period, as well as a meteorological or growing season.
The Tickeron PE Growth Rating for this company is (best 1 - 100 worst), pointing to worse than average earnings growth. The PE Growth rating is based on a comparative analysis of stock PE ratio increase over the last 12 months compared against S&P 500 index constituents.
The Tickeron Valuation Rating of (best 1 - 100 worst) indicates that the company is slightly overvalued in the industry. This rating compares market capitalization estimated by our proprietary formula with the current market capitalization. This rating is based on the following metrics, as compared to industry averages: P/B Ratio (28.409) is normal, around the industry mean (20.077). P/E Ratio (93.417) is within average values for comparable stocks, (332.093). Projected Growth (PEG Ratio) (1.008) is also within normal values, averaging (2.023). Dividend Yield (0.005) settles around the average of (0.013) among similar stocks. P/S Ratio (34.130) is also within normal values, averaging (72.952).
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General Information
a manufacturer of digital and analog semiconductor products
Industry Semiconductors
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