Broadcom CEO Hock Tan.
lucas jackson reuter
broadcom’s Quarterly results and guidance beat Wall Street expectations. It didn’t matter.
The company’s stock plunged 11% on Friday, its worst pace since January, as investors exited the artificial intelligence industry. oracle After plunging 10% following the earnings release, the stock fell 4% the day before.
With AI driving the stock market and the broader economy this year, any negative sentiment could have far-reaching implications. The Nasdaq index fell about 1.4% on Friday, while the S&P 500 index fell nearly 1%.
The companies hardest hit are those most closely connected to AI infrastructure. AI infrastructure is booming as hyperscalers build out their own data centers to meet what they describe as an insatiable demand for compute-intensive AI services. Broadcom, which makes custom chips for many big tech companies, roughly doubled in market value in each of the past two years before rising again in 2025.
“This stock is up 75% to 80% since the beginning of the year. We’re seeing a bit of a pullback,” Mizuho analyst Vijay Rakesh said on CNBC’s “Squawk on the Street” on Friday. “We will be the buyer in this exit.”
Mizuho raised its price target to $450 from $435. It was trading below $364 as of Friday afternoon.
“We’re still growing here,” Rakesh said. “They still google Throughout the hardware stack, metaAnthropic, and even OpenAI in the future. ”
According to LSEG, Broadcom reported a 28% increase in revenue for the quarter, totaling $18.02 billion, primarily due to a 74% increase in AI chip sales, beating analysts’ average estimate of $17.49 billion. Adjusted earnings per share were $1.95, beating the average estimate of $1.86.
CEO Hock Tan said Broadcom expects AI chip sales to double from a year ago to $8.2 billion this quarter for both custom AI chips and AI networking semiconductors.
Investors are concerned that higher initial costs are hurting profit margins, at least in the short term. Chief Financial Officer Kirstin Spears said on an earnings call that some of Broadcom’s AI chip systems have “lower gross margins” because they need to buy more parts to produce server racks.
Broadcom also said it has a $73 billion AI backlog over the next 18 months. Part of that is due to a $21 billion order from Anthropic, which the company disclosed Thursday as a major customer.
OpenAI has been highly touted as a customer after a multibillion-dollar deal announced in October, but Tan offered some hope for the deal late Thursday, telling investors he was “not really looking forward to 2026.”
Bernstein analyst Stacey Rasgon said in a note Friday that “AI fears” are driving Broadcom’s stock decline.
“Frankly, I don’t know what else you could hope for, as the company’s AI story not only continues to overperform, but also accelerates,” Razgon, who recommended the stock as a buy and raised his price target, wrote in a note.
Oracle faces even more extreme skepticism. The stock is currently down more than 40% from its September record. The company reported on Wednesday that it beat profits but missed out on revenue, and investors were disappointed that they were not given details about how Oracle would fund a major expansion that has so far required massive debt.
coreweaveThe company, which invests in data centers to provide cloud-based AI services, fell 9% on Friday, losing more than half its value since its peak in June.
Attention: Mizuho raises Broadcom’s price target
