US Stock Market Move | AI chip full year revenue guidance lower than expected, Broadcom Inc. (AVGO.US) opens with a steep drop of over 15%.

On Thursday, Broadcom Inc. (AVGO.US) opened with a more than 15% drop, marking its largest decline since January 2025, now trading at $403.15. On the news front, Broadcom Inc. once again delivered better-than-expected performance, but the much-anticipated AI chip revenue guidance was disappointing, indicating that the company's progress in gaining market share in the rapidly growing AI chip sector may be slower than expected by the market. The financial report showed that in the second quarter of the 2026 fiscal year ending May 3, Broadcom Inc. achieved record quarterly revenue of $22.2 billion, a 48% year-on-year increasesignificantly higher than the 29% year-on-year growth in the previous quarter and above the analyst average expectation of $22.1 billion; Non-GAAP net profit was $12.1 billion, up 55% year-on-year; adjusted earnings per share was $2.44, higher than the analyst average expectation of $2.39. Broadcom Inc. President and CEO Hock Tan said, "Broadcom Inc.'s second-quarter revenue, operating profit, and free cash flow reached historic highs, mainly due to the accelerating growth of AI chip revenue and strong operating leverage. AI chip revenue in the second quarter reached $10.8 billion, up 143% year-on-year, exceeding expectations, mainly due to the increasing demand for custom AI accelerators and AI network products in the market." In terms of guidance, Broadcom Inc. expects revenue in the third quarter to be approximately $29.4 billion (equivalent to an 84% year-on-year increase), higher than the analyst average expectation of $28.6 billion. However, for the core of performance growth, AI chips, Broadcom Inc. expects AI chip revenue in the third quarter to be approximately $16 billion (equivalent to a year-on-year increase of over 200%), lower than the analyst average expectation of $17.2 billion, and some more optimistic buyer expectations are even higher. The company also expects AI chip revenue for the 2026 fiscal year to be approximately $56 billion, also lower than the analyst average expectation of $57.6 billion.