AVGO Stock Sinks To Near 5-Month Lows Despite Exploding AI Sales - Wall Street Reactions Are Mixed

(MENAFN- AsiaNet News)

• The company guided revenue of $34.8 billion in Q4, marginally lower than Street estimates of $34.85 billion.
• Broadcom sees AI semiconductor revenue potentially reaching $230 billion by fiscal 2028, with Anthropic and OpenAI emerging as major growth drivers.
• Macquarie expects Anthropic alone to purchase more than $40 billion from Broadcom in fiscal 2028.

Broadcom (AVGO) shares were in the spotlight on Thursday after reporting better-than-expected quarterly results and a massive increase in its AI revenue outlook. 

However, Wall Street had a mixed reaction to the company's report. Evercore ISI lowered its price target on the stock to $578 from $582 while keeping an 'Outperform' rating. The firm noted that  the results were "solid" and accompanied by "promising guidance that underscores its significant future growth potential."

However, the analyst attributed the dip in the stock price to broader signals in the semiconductor sector and price-to-earnings compression. According to Evercore, this "is a concern, especially as upward revisions to estimates coincide with downward shifts in multiples across the sector."

At the same time, TD Cowen lowered its price target on Broadcom to $475 from $500 and maintained a 'Buy' rating on the shares. 

However, Morgan Stanley raised its price target to $505 from $502 while Cantor Fitzgerald raised its target to $600 from $525. Both firms have an 'Overweight' rating on the shares. 

As of this writing, AVGO shares traded lower by 6% and hit their lowest levels in nearly five months.

AI To Drive Revenue Growth Into Fiscal 2028

Broadcom reported third-quarter revenue of $29.6 billion, up 86% year-over-year, and ahead of Wall Street's expectations of $29.4 billion, according to Fiscal. Earnings of $3.32 per share also topped consensus estimates of $3.24 per share. AI semiconductor revenue more than tripled to $16.7 billion.

The company guided revenue of $34.8 billion for the fourth quarter (Q4), marginally below Street estimates of $34.85 billion. However, CEO Hock Tan expects the momentum to accelerate.

Broadcom sees AI semiconductor revenue reaching about $115 billion in fiscal 2027, roughly double the $58 billion expected this year, before potentially doubling again to $230 billion in fiscal 2028.

Anthropic, OpenAI To Drive AVGO's Next Growth Leg

BMO Capital raised its target to $575 from $455, and kept an 'Outperform' rating, citing Broadcom's relationships with six major AI customers. It said Anthropic and OpenAI appear to be expanding computing capacity particularly aggressively.

In April, Anthropic announced a deal with Broadcom for multiple gigawatts of next-generation TPU capacity beginning in 2027 to support its Claude models. OpenAI, meanwhile, is working with Broadcom on 10 gigawatts of custom AI accelerators through 2029.

Macquarie upgraded Broadcom to 'Outperform' with a price target of $490. The firm expects Anthropic alone to purchase more than $40 billion from Broadcom in fiscal 2028.

Retail Highlights 'Weak' Guidance

Despite the decline, retail sentiment for AVGO on Stocktwits turned 'extremely bullish' from 'bullish' a day earlier, amid a 1,067% increase in message volumes.

One user called the guidance“weak” and expects the stock to decline further.

View this Stocktwits post

Another user called the selloff a“market norm.”

View this Stocktwits post

AVGO shares are down 0.6% so far in 2026. In comparison, the iShares Semiconductor ETF (SOXX) has gained over 64% over the same period.

Also read: Jensen Huang Says $12.9B Is What It Took To Close The Deal With Hugging Face, And 'It's Worth Every Single Penny'

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