Updated

Updated · 24/7 Wall St. · Jun 22

Broadcom Posts $22.2 Billion Q2 Revenue as AI Chip Sales Jump 143% to $10.8 Billion

Updated

Updated · 24/7 Wall St. · Jun 22

Broadcom Posts $22.2 Billion Q2 Revenue as AI Chip Sales Jump 143% to $10.8 Billion

Q: Why did Broadcom's stock fall despite record AI profits and a massive $73 billion backlog?

Broadcom’s shares fell because the results, while strong, did not clear the market’s very high bar. The main trigger was guidance. Investors had expected Broadcom to raise its full-year AI semiconductor revenue target after Q2 AI sales jumped 143% and the company disclosed a $73 billion backlog. Instead, management reiterated its FY2026 AI target of $56 billion and kept its FY2027 goal at more than $100 billion. In a stock already priced for upside surprises, that was read as a sign management was not ready to promise more. There were also smaller but important misses in the quarter. Total Q2 revenue of about $22.19 billion came in just below consensus, and the infrastructure software segment, including VMware, was weaker than expected. That mattered because software is Broadcom’s highest-margin business and helps support the company’s broader AI expansion. Slower software growth raised concerns about margin quality even as AI chip revenue surged. Investors are also watching concentration and profitability risks. Broadcom’s AI boom depends heavily on a small group of hyperscale customers, so any slowdown in their spending could have an outsized effect. At the same time, the mix shift toward custom AI silicon and systems is pressuring gross margins relative to the richer software business. So the selloff was less about current demand—which remains very strong—and more about expectations, segment mix, and whether Broadcom’s future targets should have been lifted further.

3 articles · Updated · 24/7 Wall St. · Jun 22

$22.187 billion in Q2 FY2026 revenue marked a 47.9% year-over-year rise for Broadcom, while non-GAAP EPS reached $2.44 and extended its streak to eight straight beats.
$10.8 billion in AI semiconductor revenue drove the quarter, up 143%, and CEO Hock Tan forecast Q3 revenue of about $29.4 billion with AI revenue climbing to $16 billion.
49% operating margin and $10.262 billion in free cash flow underscored the company’s leverage, with adjusted EBITDA margin at 69% and capex limited to $231 million.
$19.628 billion in cash and equivalents, a 10% dividend increase to $0.65 quarterly, and a $10 billion buyback authorization through Dec. 31, 2026 reinforced Broadcom’s shareholder-return capacity.
Broadcom still faces concentration risk because a small number of hyperscalers drive custom AI accelerator demand, even as management targets more than $100 billion in AI sales by 2027.