Broadcom could be headed for one of the worst 1-day destructions in shareholder value ever

Broadcom (AVGO) investors should person known it was going to beryllium a Black Thursday erstwhile sharp-tongued CEO Hock Tan started his net telephone by speechmaking past year's numbers disconnected a portion of paper.

"Well, successful Q2, gross was a grounds $15 cardinal arsenic we grew 79% year-on-year. Driving this maturation was AI semiconductor gross astatine a grounds $10.8 billion, up 143% — well, fto maine restart, guys," Tan said to statesman the telephone connected Wednesday afternoon. "Thank you, Ji. Thank you, everyone, for joining today. In our fiscal Q2 2026, full gross reached a grounds $22.2 billion, up 48% year-on-year, supra our guidance connected spot successful AI semiconductors.”

Oops! The artificial quality stock, which had tally up adjacent to 40% twelvemonth to day up of the results, had the aforesaid vibe.

The analysis: Broadcom faced precocious expectations for its net aft beardown upside surprises from different AI plays successful caller weeks, similar Dell (DELL), Hewlett Packard Enterprise (HPE), Cisco (CSCO), and Snowflake (SNOW).

The institution had a mixed study compared to the Street’s jacked-up estimates, however.

Broadcom reported gross of $22.19 billion, modestly exceeding the statement estimation of $22.13 billion. But it fell abbreviated of susurration numbers connected Wall Street. Earnings per stock came successful astatine $2.44, topping estimates of $2.39.

Semiconductor gross from artificial quality successful the 2nd 4th grew 143% twelvemonth implicit year. However, AI spot income for the 3rd 4th were projected astatine $16 billion, beneath analysts' estimates of $17.2 billion, Yahoo Finance's Ines Ferré reports.

"Not arsenic bully arsenic we hoped, but thesis unchanged," HSBC expert Frank Lee wrote successful a note.

Shares of Broadcom fell 15% successful premarket trading, connected way to hitch retired astir $300 cardinal successful marketplace cap. If this holds into the Thursday close, it volition people 1 of the worst routs successful marketplace headdress for a institution successful history, per information from the FT.

AlphaSpace intel: Broadcom had nary country for its mistake successful its net oregon guidance from a valuation perspective. Data from Yahoo Finance AlphaSpace shows Broadcom trading astatine a guardant price-to-earnings ratio of 43 times, astir doubly the aggregate of the S&P 500.

The bottommost line: We privation Tan a amended commencement connected the adjacent net telephone 3 months from now. Unclear if his banal terms volition beryllium backmost to wherever it was earlier his precocious Wednesday fumble.

Brian Sozzi is Yahoo Finance's Executive Editor and a subordinate of Yahoo Finance's editorial enactment team. Follow Sozzi connected X @BrianSozzi, Instagram, and LinkedIn. Tips connected stories? Email [email protected].