Citi revisits Broadcom stock price target after post-earnings selloff
Broadcom shares fell 12.6% on June 4 after results largely matched expectations but did not boost AI guidance as some investors wanted. The company reported fiscal Q2 adjusted EPS of $2.44 and revenue of $22.19B. It forecast current-quarter revenue of ~$29.4B. Citi reiterated a buy rating and $500 target, citing a buying opportunity despite slightly weaker AI revenue guidance.
Post-earnings selloff is being reframed as a Citi “buying opportunity” while the key debate is whether AI mix and margins are sustainably supportive.
Broadcom shares fell 12.6% after earnings largely met expectations but AI revenue guidance/reiteration disappointed some investors.
Near-term volatility likely tied to AI revenue trajectory and customer demand sensitivity; upside case depends on AI bookings translating into sustained guidance.
Background
Broadcom’s AI business centers on custom AI accelerators rather than GPUs, and investors expected a clearer AI forecast upgrade after strong AI infrastructure demand.
Why it matters
The article frames the market’s reaction around the gap between strong reported growth and the lack of incremental AI forecast raising, while Citi emphasizes guidance alignment and margin/mix dynamics.
Market relevance
Key trade drivers are AI revenue acceleration vs. margin dilution from custom chip mix, plus customer concentration risk tied to Google demand.
Market effects
Highlights how AI accelerator demand is shifting toward custom chips (lower gross margin profile), which can affect read-across valuation for AI infrastructure suppliers.
Primarily US large-cap semis sentiment; could influence broader Nasdaq/semiconductor risk appetite after a high-profile earnings reaction.
AI infrastructure spend remains the global theme; customer concentration risk (Google) is a cross-company consideration for AI supply chains.
Alternative perspectives
The selloff may be overdone because AI revenue is still accelerating (AI revenue more than doubled to $10.8B; $16B guided for the current quarter) even without raising the >$100B fiscal 2027 AI guidance.
Gross margin pressure is explicitly tied to AI mix; traders should monitor whether operating margin stability truly offsets margin dilution as AI share of revenue rises to ~38% in July.
Key entities
- public_companyBroadcom
Reported fiscal Q2 adjusted EPS $2.44 and revenue $22.19B; guided current-quarter revenue ~$29.4B and AI revenue to $16B.
- analyst_firmCiti
Maintained buy rating and $500 price target, calling the pullback an enhanced buying opportunity.
