Broadcom Drops 12% and Marvell Slides as AI Sales Outlooks Miss Loftiest Hopes
Updated
Updated · The Motley Fool · Jun 7
Broadcom Drops 12% and Marvell Slides as AI Sales Outlooks Miss Loftiest Hopes
3 articles · Updated · The Motley Fool · Jun 7
Summary
Broadcom fell about 12% on Thursday and slid further Friday, while Marvell surrendered much of a 32% surge after investors judged both companies' AI chip outlooks against unusually high expectations.
Those moves came despite strong growth: Broadcom's fiscal second-quarter revenue rose 48% to $22.2 billion and AI semiconductor sales jumped 143% to $10.8 billion, while Marvell's fiscal first-quarter revenue increased 28% to $2.4 billion.
The disappointment centered on valuation and expectations. Broadcom trades at roughly 64 times earnings and Marvell near 90 times, leaving little room for guidance that does not clearly exceed bullish forecasts.
Broadcom still appears better positioned after the sell-off, with larger scale, $10.3 billion in quarterly free cash flow and a forecast for more than $16 billion in third-quarter AI chip revenue, versus Marvell's smaller base and heavier customer concentration.