The slide didn\u2019t stop there. By the close on June 9, the stock sat at $396.60, down 18.64% across five trading days.<\/p>\n
The stock\u2019s price drop may be tied to something CEO Hock Tan said.<\/p>\n
Why Broadcom stock kept sliding after a record AI quarter<\/h2>\n
Investors expected Broadcom to raise its AI forecast, but it didn\u2019t.<\/p>\n
Instead of lifting the company\u2019s target of more than $100 billion in AI semiconductor revenue by fiscal 2027, Tan reaffirmed it, according to CNBC. <\/p>\n
And this made the market uncomfortable.<\/p>\n
Then the bigger blow followed<\/strong>.<\/p>\n We are only chips.<\/p>\n<\/blockquote>\n Tan said Broadcom will now sell \u201cchips only,\u201d stepping back from the fully integrated AI systems it had previously promised customers, according to the earnings call transcript on Investing.com.<\/p>\n That move dampens hopes for the higher-margin business that investors were counting on.<\/p>\n Justin Sullivan / Getty Images<\/p>\n<\/figcaption><\/figure>\n Most people know Broadcom as a chip company, and that label fits. <\/p>\n It co-designs custom AI accelerators, called XPUs, with individual cloud giants, then sells the networking silicon that links thousands of those chips inside a data center.<\/p>\n That business has exploded. AI semiconductor revenue jumped 143% year over year<\/strong> to $10.8 billion last quarter, while total revenue hit a record $22.19 billion, up 48%, Bloomberg reported.<\/p>\n That run-up made the fall harder. <\/p>\n AVGO had rallied for weeks into earnings, which pushed the bar for success well above the company\u2019s official guidance.<\/p>\n Selling chips only means giving up the servers and full systems that carry fatter margins than chips alone do, and the pressure is already showing. <\/p>\n Broadcom guided third-quarter gross margin down to 74% from 77%, because lower-margin AI chips now make up a bigger slice of revenue than its software business, Barron\u2019s reported.<\/p>\n Related: HSBC massively revamps Broadcom’s stock price target<\/strong><\/p>\n The shift lands hardest on the AI labs that buy Broadcom\u2019s custom silicon. <\/p>\n Tan named Anthropic, Google, Meta, and OpenAI among six core custom-chip customers, all of which design their own silicon through partners to control cost and supply.<\/p>\n Hok Tan acknowledged that Google, Broadcom\u2019s largest AI customer, will likely use more than one chip supplier going forward.<\/p>\n That raises the possibility of Broadcom losing share.<\/p>\n More AI Chip Stocks:<\/strong><\/p>\n KeyBanc\u2019s John Vinh kept his overweight rating but flagged the risk of Broadcom ceding Google work to MediaTek-based silicon. He named Nvidia as his preferred chip stock, according to CNBC.<\/p>\n Other AI chipmakers fell with it. AMD, Micron, and Marvell all slid.<\/p>\n But this was just a sign that investors were cooling on a few overpriced stocks, not losing faith in AI.<\/p>\n Even after the drop, Broadcom has far outpaced the broader market.<\/p>\n AVGO returned about 61.91%<\/strong> over the past year, against 23.42% for the S&P 500<\/strong>, according to Yahoo Finance data.<\/p>\n But that outperformance also carries some risk. <\/p>\n At about 66 times earnings, the stock leaves little room for a stumble, which is why a forecast that failed to exceed expectations triggered such a sharp repricing.<\/p>\n The selloff reflects a reset of stretched expectations, not a loss of faith in AI. <\/p>\n Broadcom\u2019s order book and customer list stay among the strongest in the industry.<\/p>\n Still, the \u201cchips only\u201d call and the unchanged target tell investors that margin expansion may be slowing.<\/p>\n For anyone weighing the stock<\/strong>, the practical question is whether $56 billion in fiscal 2026 AI chip sales, just short of the $57.6 billion Wall Street wanted, still justifies the premium.<\/p>\n Related: Susquehanna resets Broadcom stock target ahead of earnings<\/strong><\/p>\n #Broadcom #CEO #unnerves #biggest #backers #rattling #pivot<\/p>\n","protected":false},"excerpt":{"rendered":" Broadcom (AVGO) just posted the kind of quarter most chipmakers can only dream about. Record revenue, AI sales up triple digits, and a growing roster of marquee customers. Then the… <\/p>\n","protected":false},"author":1,"featured_media":6521,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[246],"tags":[8953,54,1232,369,2347,5620,8952],"class_list":["post-6520","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-popular","tag-backers","tag-biggest","tag-broadcom","tag-ceo","tag-pivot","tag-rattling","tag-unnerves"],"_links":{"self":[{"href":"https:\/\/www.fintechpulse8.com\/index.php?rest_route=\/wp\/v2\/posts\/6520","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.fintechpulse8.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.fintechpulse8.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.fintechpulse8.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.fintechpulse8.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=6520"}],"version-history":[{"count":0,"href":"https:\/\/www.fintechpulse8.com\/index.php?rest_route=\/wp\/v2\/posts\/6520\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.fintechpulse8.com\/index.php?rest_route=\/wp\/v2\/media\/6521"}],"wp:attachment":[{"href":"https:\/\/www.fintechpulse8.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=6520"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.fintechpulse8.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=6520"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.fintechpulse8.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=6520"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}\n
![](\"https:\/\/www.thestreet.com\/.image\/NDA6MDAwMDAwMDAzMDcxNDA4\/broadcomlogo_pl_090626.jpg?profile=rss\")
What Broadcom does and how its AI chip business got this big<\/h2>\n
The \u201cchips only\u201d shift that worried Broadcom\u2019s AI backers<\/h2>\n
Why Google leaning on other suppliers matters for AVGO<\/h2>\n
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What needs to happen for Broadcom stock to recover<\/h3>\n
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Broadcom stock versus the S&P 500<\/h2>\n
What Broadcom\u2019s pivot means for investors right now<\/h2>\n