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Broadcom (AVGO) has been one of the undisputed champions of the artificial intelligence (AI) boom. As a leading designer of custom AI chips for hyperscale cloud giants, the company has become a cornerstone of the rapidly expanding AI infrastructure market, helping drive its stock nearly 380% higher over the past three years. Yet, despite delivering another standout quarter recently, investors hit the sell button. Following its fiscal second-quarter earnings report on June 3, Broadcom shares sank 12.6% in the next trading session and extended those losses with another 8% decline a day later.
The market's reaction is puzzling. Broadcom not only beat Wall Street's expectations on both revenue and earnings, but it also reported surging AI semiconductor demand and projected AI chip revenue to grow further by more than 200% in the third quarter of fiscal 2026. In almost any other industry, that kind of outlook would have sent shares soaring. Instead, the headline appears to have been drowned out by impossibly high expectations surrounding AI chipmakers.
