Broadcom cools semiconductor enthusiasm

Broadcom is one of the heavyweights of the semiconductor sector, an industry where investor expectations remain particularly high. While many players are already struggling to surprise, despite solid results, the group posted figures slightly below anticipations and adopted a cautious tone for its outlook, triggering almost a 15% drop in the stock. This correction also dragged down several emblematic sector names, including Marvell, Arm and Micron.

After Wall Street closed on Wednesday, Broadcom unveiled its Q2 results for FY 2026. Overall, the publication remains positive, but it was not enough to meet the market's particularly ambitious expectations.

The group notably reported revenue of $16bn in its semiconductor business, slightly below analyst estimates of $16.36bn. Furthermore, the company maintained its long-term target of $100bn in AI-related revenue by 2027, without announcing any upward revision likely to further support sector valuations.

The market's reaction was immediate. Broadcom lost nearly 15% during the session, erasing approximately $300bn in market capitalization. The movement quickly spread across the semiconductor ecosystem, with declines of around 5% for Marvell, 9% for Arm, and 8% for Micron.

This reaction illustrates persistent investor concerns regarding the valuation levels reached by certain AI-related stocks. Results remain solid, but expectations have become so high that the slightest sign of a slowdown or caution can trigger brutal adjustments.

Despite this correction, analysts continue to defend the case. Harlan Sur, a sector specialist at JPMorgan, indicated that he had raised his estimates for Broadcom, which he still considers his "top pick in the semiconductor universe."

The analyst particularly highlights the acceleration of the software business since the VMware acquisition, as well as the persistent strength of AI demand, supported by a particularly robust order book.

At Jefferies, Blayne Curtis also adopts a constructive view despite a publication he describes as "mixed." The title of his note summarizes his analysis: "AI momentum remains intact, but it is difficult to show acceleration every quarter."

The analyst maintains his buy recommendation and believes that growth prospects remain attractive. According to him, future deployments related to Meta and OpenAI should support the business starting next year, while initial estimates for FY 2028 suggest another year of strong growth.

While Broadcom has temporarily cooled market enthusiasm, the fundamentals of the AI sector continue to fuel marked optimism among most analysts.