Broadcom Inc. AVGO · Stock Open Broadcom Inc. in new tab

Shares tumbled 13% as investors were disappointed by cautious commentary on the software segment and a tempered outlook for AI semiconductor scaling despite record revenue; the sharp multiple contraction suggests concern over margin sustainability and execution risks ahead.

• Q2 total revenue hit a record $22.2 billion, driven by AI semiconductor revenue of $10.8 billion, up 143% year-over-year, with strong bookings over $30 billion signaling solid demand.
• Semiconductor segment revenue grew 79% YoY, with networking and XPUs contributing significantly, though non-AI semiconductors showed modest 6% growth amid seasonal wireless declines.
• Infrastructure software revenue rose 9% YoY to $7.2 billion, meeting guidance but lacking impressive acceleration, with ARR growth of 17%; management forecasts only 31% software growth in Q3.
• Operating margins remained elevated at 67% (adjusted EBITDA 69%), but concerns linger about sustaining such exceptionally high margins as AI investments scale rapidly.
• Q3 semiconductor revenue guidance of $20.5 billion (up 124%) and AI semiconductor revenue acceleration to $16 billion are positive but may be offset by cautious tone on future execution and AI software adoption risks.