1 Under-the-Radar Reason to Hold Broadcom Stock After Its Historic 14% Earnings Crash

By Alex Sirois Published Jun 9, 1:29PM EDT

Quick Read

AVGO posted 47.9% revenue growth and $10.8 billion in AI semiconductor revenue up 143%, yet the stock still crashed nearly 14% after earnings.
Broadcom's AI revenue anchors to just six core customers, and any single hyperscaler pulling allocations could derail Hock Tan's $100 billion 2027 target.
Analyst consensus targets 30% upside for AVGO, but a trailing P/E of 64 means even a modest earnings beat triggered a double-digit selloff.
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1 Under-the-Radar Reason to Hold Broadcom Stock After Its Historic 14% Earnings Crash — © Justin Sullivan / Getty Images News via Getty Images

At $396.60, Broadcom (NASDAQ:AVGO | AVGO Price Prediction) is a Hold. The stock just suffered its second-largest negative earnings day reaction in nine quarters, and the reason behind it deserves more attention than the headline number.

Broadcom designs custom AI accelerators, networking silicon, and infrastructure software for hyperscaler buildouts. Fiscal Q2 delivered strong results: revenue hit $22.19 billion, up 47.9% year over year, AI semiconductor revenue reached $10.8 billion, up 143%, and management guided Q3 to $29.4 billion in revenue with $16 billion in AI. The stock fell 12.59% on the day and 13.78% over the week anyway.

Why The Reaction Looked Like A Sentiment Reset

The bull case is straightforward. Bookings for AI semiconductors hit over $30 billion against $10.8 billion shipped, and CEO Hock Tan reiterated guidance for AI semiconductor revenue in excess of $100 billion in 2027. Named partnerships with Google, Anthropic, OpenAI, and Meta extend visibility into 2028.

Free cash flow reached $10.26 billion, or 46% of revenue, cash on hand climbed 107% YoY to $19.63 billion, and the company is deleveraging. Analyst consensus targets $517.61, implying meaningful upside, and Hock Tan called demand for XPUs and networking “simply insatiable.”

Why The 14% Selloff Tells You The Bar Is Now Brutal

The bear case starts with valuation. AVGO trades at a trailing P/E of 64 and a forward P/E of 34, with an EV/EBITDA of 44. A modest 1.79% earnings beat triggered a double-digit drop, showing expectations had run ahead of even strong results. Insider activity skews to selling across 108 recent transactions.

Q3 gross margin is guided lower as the AI mix grows, since ASICs and TPUs carry lower margins than legacy semiconductors and software. Layer in semiconductor cyclicality, trade frictions, and contract manufacturing dependence, and the cushion thins quickly.

The Under-The-Radar Reason To Wait: Customer Concentration

The hold case rests on a single quiet number. Broadcom’s AI growth anchors to six core customers, with Google, Meta, OpenAI, and Anthropic driving most gains. Any single hyperscaler shifting allocations, internalizing design work, or trimming capacity could move the entire revenue ramp.

That risk is what the post-earnings price action is signaling. The company bought back $600 million in stock and pays a $0.65 quarterly dividend while investors await evidence of broadening customer mix and a clean Q3 report against the $29.4 billion bar.

What The Stock And The Targets Actually Say

AVGO trades at $396.60, against an analyst consensus target of $517.61, implying roughly 30% upside if the Street is right. The ratings split shows heavy conviction: 7 Strong Buy, 37 Buy, 4 Hold, 0 Sell.

Recent performance tells a more cautious story. AVGO is down 13.78% over the past week, while the S&P 500 fell 2.4% over the same earnings window. Year to date, AVGO is up 14.82%, and the one-year return is 61.9%.

At $396.60, Broadcom Is A Hold

The business is firing on all cylinders, but the market just told you the bar for further multiple expansion is now extraordinary. Aggressive accumulation at these levels would require underwriting flawless execution against a $29.4 billion Q3 guide and a $100 billion AI revenue path in 2027, with concentration risk baked in.

Upgrade triggers are clear: a clean Q3 beat on the AI line, evidence the customer base is broadening, and a stock retest of the $365 technical support area on lighter volume. Downgrade triggers are equally clear: a single hyperscaler pulling forward less capacity, gross margin compression beyond the guided mix shift, or any softening in the bookings-to-shipment ratio that ran nearly three to one last quarter.

The cost of patience is low. The company is buying back stock, paying a growing dividend, and deleveraging. The cost of chasing a 64-times trailing earnings name into a selloff is high. The next report could confirm the ramp, or a deeper pullback could compress the entry multiple.

Patience appears warranted because the fundamental story is intact, but the price still has to earn it.

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About the Author Alex Sirois →

Alex Sirois is a financial writer with experience spanning both retail and institutional investing. He has written for InvestorPlace and held roles at BNY Mellon and Bernstein, giving him a perspective that bridges Main Street portfolios and Wall Street analysis.

Alex holds an MBA from George Washington University and has built his career across multiple industries, including e-commerce, education, and translation — a breadth of experience that informs how he breaks down complex financial topics for everyday investors. His writing is conversational, actionable, and grounded in long-term, buy-and-hold investing principles.

At 247 Wall St., Alex focuses on delivering analysis that is both accessible and useful, with a clear emphasis on helping readers make more informed decisions with their money.