Broadcom CEO Hock Tan.
Lucas Jackson | Reuters
Broadcom’s quarterly results and guidance sailed past Wall Street estimates. It didn’t matter.
The chipmaker’s shares plunged 11 % on Friday – its worst day since January – as investors fled the artificial‑intelligence trade. Oracle fell 4 % a day after a 10 % tumble following its earnings report.
AI has been the engine driving both the stock market and the broader economy this year, so any negative sentiment can ripple across the entire system. The Nasdaq slid about 1.4 % on Friday, while the S&P 500 slipped nearly 1 %.
The firms hit hardest are those most tightly coupled to AI infrastructure, a sector that has surged as hyperscalers build out data centers to satisfy what they call “insatiable demand” for compute‑intensive AI services. Broadcom supplies custom chips to many of the world’s largest tech companies and saw its market cap roughly double each of the past two years before rallying again in 2025.
“This stock is up 75‑80 % year‑to‑date. You’re seeing a little bit of a pullback,” Vijay Rakesh, an analyst at Mizuho, told CNBC’s *Squawk on the Street* on Friday. “We would be buyers on this pullback.”
Mizuho raised its price target on Broadcom to $450 from $435. The shares were trading below $364 as of Friday afternoon.
“This is still where the growth is,” Rakesh added. “They remain the primary supplier to Google across its hardware stack, to Meta, to Anthropic and even to OpenAI down the road.”
Broadcom reported revenue growth of 28 % for the quarter, driven largely by a 74 % jump in AI‑chip sales, reaching $18.02 billion and topping the $17.49 billion average analyst estimate, according to LSEG. Adjusted earnings per share came in at $1.95, beating the consensus $1.86.
CEO Hock Tan said Broadcom expects AI‑chip sales this quarter to double from a year earlier, reaching $8.2 billion, encompassing both custom AI chips and semiconductors for AI networking.
One concern for investors is margin pressure in the near term due to higher upfront costs. CFO Kirsten Spears noted on the earnings call that “gross margins will be lower” for some AI‑chip systems because the company must purchase more components to build server racks.
Broadcom also disclosed a $73 billion backlog of AI orders over the next 18 months, including $21 billion from Anthropic, which was identified as a key customer on Thursday.
While OpenAI was once highlighted as a marquee client following a multibillion‑dollar agreement announced in October, Tan tempered expectations, stating, “We do not expect much in ’26.”
Bernstein analyst Stacy Rasgon wrote that “AI angst” is pushing Broadcom’s shares lower, but added, “Frankly we aren’t sure what else one could desire as the company’s AI story continues not only to over‑deliver but to accelerate.” Rasgon maintains a buy rating and raised his price target.
Oracle faces even steeper skepticism. The stock is now more than 40 % below its September peak. Although the company beat earnings expectations, it missed on revenue, and investors remain uneasy about how Oracle will fund its massive AI‑driven build‑out, which has already required significant debt financing.
CoreWeave, a firm investing heavily in data‑center capacity to offer cloud‑based AI services, sank 9 % on Friday and has lost more than half its value since its June high.
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