Wall Street Analyst: Broadcom’s Flat AI Guidance Justified the Selloff, but Nvidia Remains Best-in-Class Chip Play

Broadcom held the line on its AI guidance for its upcoming third quarter on Wednesday night, but the stock still fell 15% on Thursday morning. That counterintuitive outcome sits at the center of KeyBanc Capital Markets analyst John Vinh’s reaction on CNBC’s Squawk Box, where he defended his Overweight rating on Broadcom (NASDAQ:AVGO | AVGO Price Prediction) while reiterating that NVIDIA (NASDAQ:NVDA) remains the chip name to own.

Why Flat Guidance Tanked the Stock

Vinh’s first point: when a stock runs on a streak of beat-and-raise quarters, the unofficial bar moves well above the official guide. Broadcom’s Q2 was strong on the surface, with revenue of $22.187 billion (up 47.9% year over year) and AI semiconductor revenue of $10.80 billion, up 143% year over year. The Q3 AI guide called for $16.0 billion, over 200% YoY growth. But the full-year framing held steady.

As Vinh put it: “For Broadcom to come out and just reiterate its kind of AI outlook for not only fiscal 26, but also fiscal 27 of $100 billion. And not take it up is is probably not good enough. Just given where expectations are.”

The Two Real Headwinds

Vinh flagged two concrete reasons management may be guiding conservatively. First, supply chain bottlenecks outside Broadcom’s control: “management had talked about how dependencies on other supply chain constraints, such as you know, power grid, PowerShell, and other supply chain dependencies outside of just building chips for these data centers, impacted their outlook.” Power and grid capacity have become the gating factor for how fast hyperscalers can actually light up AI campuses.

Second, share dynamics at Broadcom’s largest AI customer. “If you look at what’s happening within their largest customer for AI, which is Google, you know, there’s some level of share loss there,” Vinh said, pointing to MediaTek-based custom silicon. That customer is Alphabet (NASDAQ:GOOGL), whose $190 billion 2026 CapEx plan and $460 billion cloud backlog underpin much of the custom-ASIC demand thesis.

The Bull Math Underneath

Despite the selloff, KeyBanc raised its price target to $575 from $500. The reason is deployment math. Broadcom is delivering AI silicon equivalent to roughly ten gigawatts of compute capacity, which Vinh values at approximately $13 billion per gigawatt. As he framed it: “We think, you know, ten times 13 billion would imply that potentially there’s there’s upside to, you know, much higher numbers than the 100 billion that they guided for.” His scenario models fiscal 2027 AI revenue potentially reaching $130 billion versus the $100 billion guided.

Why NVIDIA Stays Best-in-Class

Vinh’s pivot to NVIDIA: “Nvidia is still hands down the best in class AI chip play in the sector. You know I don’t think anyone’s going to be able to on the merchant silicon side going to really be able to gain meaningful traction versus Nvidia anytime soon.”

NVIDIA’s most recent quarter delivered revenue of $81.615 billion, up 85.23% year over year, with Data Center networking revenue of $14.8 billion growing 199% YoY and non-GAAP gross margin of 75.0%. Q2 guidance was raised to $91.0 billion plus or minus 2%. Trading at roughly 24x forward earnings, NVIDIA slipped intially on Thursday morning, but rebounded in the afternoon. Shares gained 1.94% today, while Broadcom shares closed the day down 12.59%.

The Investor Takeaway

Vinh’s framework splits the AI chip trade into two buckets. Broadcom becomes the “buy the disappointment” because of an expectations reset rather than a fundamental break, with the post-selloff multiple offering a better entry into the same long-term deployment story.

NVIDIA is the “pay up for quality” name, where the premium multiple is justified by an unmatched full-stack platform and by the absence of a credible merchant-silicon challenger on the horizon.