Broadcom Stock Drops 4.2% Despite 16.7% Revenue Surge

On June 6, 2025, Broadcom's stock experienced a 3.4% drop in pre-market trading, reflecting investor sentiment following the company's recent financial performance and guidance.

Broadcom, a key player in the AI hardware ecosystem, reported a 16.7% increase in revenue for its semiconductor solutions for data centers and networks, reaching $84.1 billion in the second quarter. The company's overall revenue for the quarter was $150 billion, slightly above the $149.9 billion estimate. However, the stock price declined by 4.2% in after-hours trading, indicating that investors had higher expectations or were taking profits after the stock's recent surge.

CEO Hock Tan highlighted that the company expects AI semiconductor revenue to accelerate to $51 billion in the third quarter, marking the tenth consecutive quarter of growth. This growth is driven by continued investment from major partners. However, non-AI semiconductor revenue remains near its bottom, with a slower recovery.

Despite the positive outlook on AI semiconductor revenue, the overall market reaction suggests that investors are cautious about the company's future performance, especially given the high valuation and the recent stock price increase. The company's guidance for the third quarter includes a projected revenue of $158 billion, slightly above analyst estimates, but the market's response indicates a need for more substantial growth to justify the current stock price.