Broadcom stock sinks 12% as AI chip forecast disappoints

June 5, 2026 - 03:09

Broadcom saw its stock price drop sharply in pre-market trading after the company released quarterly results that failed to excite investors, particularly around its artificial intelligence chip business. Shares sank roughly 12% as the market reacted to a forecast that suggested slower-than-expected growth in the segment that has been driving much of the tech sector's recent rally.

The chipmaker reported earnings that met or beat analyst estimates on several key metrics, but the forward guidance for its AI-related semiconductor revenue came in below the highest Wall Street projections. While Broadcom continues to benefit from a broader push into custom AI accelerators and networking chips for data centers, the pace of expansion appears to be leveling off compared to the explosive growth seen in previous quarters.

Investors had grown accustomed to Broadcom consistently raising its AI revenue targets, making the more tempered outlook a notable shift. The company cited a mix of factors, including customer inventory adjustments and a more cautious spending environment among some large cloud providers. Despite the selloff, Broadcom remains one of the larger players in the AI chip space, competing with companies like Nvidia in providing the specialized silicon needed to train and run large language models.

The broader semiconductor sector also felt pressure from the news, with other chip stocks edging lower in sympathy. Analysts noted that while the long-term demand for AI infrastructure remains intact, the market is becoming more sensitive to any signs of deceleration in what has been the industry's hottest growth area.