Broadcom shares plummeted about 12% in premarket trading Thursday after the company missed quarterly revenue estimates, disappointing investors who expected stronger results from the AI boom.
The chipmaker is poised to lose more than $285 billion in market capitalization at the current share price of $418.83, if losses hold.
Matt Britzman, senior equity analyst at Hargreaves Lansdown, described the selloff as "a classic case of very high expectations meeting a market that wanted perfection."
Broadcom CEO Hock Tan reiterated the company's long-term AI revenue target of $100 billion, and nudged up shipment forecasts to more than 10 gigawatts of AI chips by 2027. TD Cowen analysts noted that reiterating ambitious targets without raising them in a market expecting "material beats and raises" is likely to disappoint investors.
AI semiconductor revenue surged 143% year-over-year to $10.8 billion this quarter. However, a downbeat outlook for third-quarter AI chip revenue stoked concerns that growth is not ramping as quickly as anticipated.
Broadcom faces intensifying competition from Nvidia and Marvell Technology, whose shares fell about 4%.
Currently, Broadcom trades at 29.9 times forward earnings, compared with Marvell's 61.7 multiple.