PALO ALTO, California, August 14, 2026, 07:50 PDT — U.S. cash markets traded during regular hours.
- Broadcom dropped 5.1% in morning trading, trailing Nvidia and Marvell.
- Broadcom expects AI to account for approximately 72% of its anticipated sequential revenue increase.
- The stock continues to trade at 65.9 times its trailing earnings.
Shares of Broadcom Inc. NASDAQ:AVGO dropped 5.1% to $396.47 during Friday morning trading. The decline increased scrutiny on the company’s valuation ahead of earnings due in September. There was no company filing available to explain the movement as of the dateline.
The investor focus is notably narrow. Broadcom’s guidance indicates that AI is expected to contribute roughly 72% of the company’s anticipated sequential revenue growth. As a result, custom accelerators and networking largely underpin its trailing price-to-earnings ratio of 65.9 times.
| AI-chip peer | Morning price | Daily change | Trailing P/E |
|---|---|---|---|
| Broadcom NASDAQ:AVGO | $396.47 | -5.11% | 65.89x |
| NVIDIA NASDAQ:NVDA | $224.98 | -0.14% | 34.44x |
| Marvell Technology NASDAQ:MRVL | $219.20 | -1.34% | 75.00x |
Broadcom lagged behind. Nvidia declined by 0.1%, and Marvell dropped 1.3%. At the quoted price, Broadcom shed about $102 billion in market value, calculated from 4.76 billion shares.
The business momentum is still strong. Revenue for the fiscal second quarter increased by 48% to $22.19 billion. Revenue from AI semiconductors surged 143% to $10.8 billion. Free cash flow advanced 60% to $10.26 billion.
| Q2 fiscal 2026 business | Revenue | Year-on-year growth | Share of company revenue |
|---|---|---|---|
| AI semiconductor | $10.80 billion | +143% | 48.7% |
| Other semiconductor | $4.21 billion | Not separately disclosed | 19.0% |
| Infrastructure software | $7.18 billion | +9% | 32.4% |
| Total | $22.19 billion | +48% | 100% |
Chief Executive Hock Tan said, “The momentum continues.” He anticipates third-quarter AI chip revenue will rise more than 200% and hit $16 billion. The outlook is an initial projection. Broadcom
| Sequential growth bridge | Q2 actual | Q3 company guidance | Increase |
|---|---|---|---|
| Total revenue | $22.19 billion | About $29.40 billion | $7.21 billion |
| AI semiconductor revenue | $10.80 billion | About $16.00 billion | $5.20 billion |
| AI share of total revenue | 48.7% | About 54.4% | +5.7 points |
| AI share of sequential growth | — | — | 72.1% |
The rationale covers both the optimistic outlook and Friday’s market reaction. AI revenue must increase by nearly 48% compared to the previous quarter, while overall revenue is expected to grow 32.5% quarter-on-quarter. Broadcom is scheduled to announce results on September 2.
Analysts on Wall Street project adjusted earnings at $3.21 per share, with revenue estimates around $29.25 billion. This figure is just under the company’s forecast of $29.4 billion, offering limited potential for an earnings surprise.
| Analyst | Firm | Recommendation | Price target | Date |
|---|---|---|---|---|
| Harlan Sur | J.P. Morgan | Buy, restated | $580 | July 27 |
| Stacy Rasgon | Bernstein | Buy, affirmed | $550 | July 27 |
| Joseph Moore | Morgan Stanley | Buy, restated | $502 | July 26 |
| Thomas O’Malley | Barclays | Buy, affirmed | $500 | July 24 |
| Hans Engel | Erste Group | Hold, lowered | Not listed | July 7 |
Analysts maintain a bullish stance. The consensus price target is $512.87, representing a potential gain of 29.4%. Achieving this level would increase Broadcom’s market capitalization by about $550 billion, based on the present number of shares outstanding.
| Valuation marker | Value | Change from $396.47 |
|---|---|---|
| Current price | $396.47 | — |
| Average analyst target | $512.87 | +29.4% |
| Highest analyst target | $630.00 | +58.9% |
| Lowest analyst target | $390.00 | -1.6% |
| 52-week high | $495.00 | +24.9% |
Latest positive analyst notes highlight the XPU roadmap. Jefferies described the previous decline as a “meaningful opportunity.” J.P. Morgan analysts stated they “would be aggressive buyers,” referring to advanced chip and packaging design. Investopedia
Risks: AI concentration poses a double-edged risk. If XPU adoption slows, it would impact anticipated growth. Last quarter, infrastructure software increased just 9%. Competitive pressures, dependence on major customers and a high earnings multiple could magnify the impact of any missed forecasts.
Friday’s decline does not undermine the AI thesis. It adjusts the valuation of evidence. Broadcom must now turn its $16 billion AI projection directly into revenue and cash.
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