Broadcom (AVGO) stock tumbled on Thursday even though the semiconductor behemoth reported better-than-expected earnings for its second quarter.
Investors are responding primarily to a slight miss on revenue that printed at $22.19 billion.
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Moreover, management didn’t present a new catalyst or reveal a fresh marquee AI customer, which further disappointed a demanding market that had been expecting blowout numbers and exciting announcements from AVGO.
Despite the post-earnings pullback, however, Broadcom stock remains a solid investment for 2026, still up a remarkable 40% versus its year-to-date low.
Why Chip Stocks Sold Off After Broadcom Earnings
Broadcom is a structural bellwether for the semiconductor sector; its mixed commentary, therefore, sent shockwaves through the entire chip complex.
On the earnings call, the Nasdaq-listed firm didn’t raise its AI semiconductor sales forecast (2026), making investors question its stretched forward price-to-earnings (P/E) multiple of roughly 48x.
In Q2, AVGO’s artificial intelligence chip sales increased 143% on a year-over-year basis to $10.8 billion.
But the mix heavily favored custom application-specific integrated circuits (ASICs) over standard silicon, and since ASICs aren’t as profitable as generic hardware, management hinted at near-term pressure on margins, which spooked investors.
This margin anxiety quickly translated into sector-wide selling, dragging the likes of Nvidia (NVDA), AMD (AMD), Micron (MU), Arm (ARM), Marvell (MRVL), and others down with it, as investors feared that the hyper-profitable phase of the AI infrastructure buildout is now normalizing.
Should You Buy the Dip in AVGO Shares Today?
For long-term investors, the post-earnings weakness in Broadcom shares is an opportunity to buy, says Jefferies’ senior analyst Blayne Curtis.
In a research note dated June 4, Curtis raised his price target on AVGO to $550, indicating potential upside of a whopping 31% from current levels.
According to him, while ASIC mix-shifts pressure metrics in the near-term, operating margins are positioned to expand dramatically as custom silicon programs for major hyperscalers — specifically Meta (META) and OpenAI — begin to ramp heavily next year.
