Key facts
- Erste Group upgraded Broadcom to Buy from Hold.
- Broadcom's stock fell 12.6% on June 4 after its Q2 earnings report.
- Broadcom reported Q2 adjusted EPS of $2.44 and revenue of $22.19 billion, beating analyst estimates.
- AI revenue more than doubled year-over-year to $10.8 billion in Q2.
- Broadcom did not raise its fiscal 2027 AI semiconductor revenue target of over $100 billion.
- Citi maintained a Buy rating on Broadcom.
Broadcom (AVGO) experienced a 12.6% stock decline on June 4 following its fiscal second-quarter earnings report, despite exceeding analyst expectations for adjusted earnings per share ($2.44 vs. $2.40) and revenue ($22.19 billion vs. $22.27 billion). The disappointment stemmed from the company not raising its fiscal 2027 AI semiconductor revenue target, which remains over $100 billion. CEO Hock Tan confirmed that AI revenue more than doubled year-over-year to $10.8 billion in Q2, with guidance for $16 billion in AI revenue in the current quarter. Broadcom's AI business model involves designing custom AI accelerators for clients, with major customers including Anthropic, Alphabet, Meta, and OpenAI. Following the selloff, Citi maintained its Buy rating, and on June 5, Erste Group upgraded Broadcom to Buy from Hold, citing its faster growth compared to peers and strong prospects.