Despite the strong earnings and a historic $100 billion long-term AI revenue target, Broadcom Inc. (AVGO) is struggling to maintain its footing above the critical $300 psychological threshold. The company reported a 29% increase in year-on-year revenue, fueled by a 52% surge in semiconductor solutions and 106% growth in AI-specific sales that reached $8.4 billion. However, the stock has been struggling to reflect this fundamental strength as a broader “risk-off” sentiment in the semiconductor sector is testing investor resolve.
Strong Q1 Results Back Bold $100 Billion AI Target
On March 4, 2026, Broadcom reported its earnings for the first quarter of 2026 that surpassed Wall Street estimates. With a 29% increase in year-on-year revenue, Broadcom reported a total revenue of $19.31 billion, compared to the estimated $19.18 billion. The bottom line was equally robust, with non-GAAP Earnings Per Share (EPS) coming in at $2.05 (vs. $2.03 expected) and GAAP net income rising to $7.35 billion from $5.50 billion a year prior.
The highlight of the earnings call was CEO Hock Tan’s bold long-term guidance. CEO Hock Tan said: “We have line of sight to achieve AI revenue from chips, just chips, in excess of $100 billion in 2027,” referring to the company’s custom AI accelerators (XPUs).
The stock rallied sharply following the announcement of this ambitious vision and the strong earnings report, climbing from $312.99 on the day of the report to a high of $350.56 by March 10. While the stock initially surged, the momentum has since evaporated.
Growth Fueled by AI Accelerators
Broadcom’s growth is anchored in its semiconductor solutions, specifically through its leadership in AI accelerators, also known as XPUs (Custom AI Processing Units). While the traditional semiconductors for broadband and smartphones remain flat, the demand for AI-specific silicon has been surging.
Broadcom reported a $8.4 billion revenue with a massive 106% growth in AI-specific sales. CEO Hock Tan shared that he is expecting the revenue to climb further in the second quarter, reaching $10.7 billion. He further stated,
“Our AI revenue growth is accelerating, and we expect AI semiconductor revenue to be $10.7 billion in Q2.”
Sector-Wide Risk-Off Sentiment Weighs on AVGO
Despite these impressive figures, the stock is struggling to reflect the strength due to a broader “risk-off” sentiment in the broader semiconductor sector. Investors are grappling with several external pressures that are outweighing Broadcom’s individual success. Specifically, escalating geopolitical tensions and persistent inflation, driven by rising energy costs, have made the market nervous about high-valuation tech stocks
Adding to the pressure is the “NVIDIA Shadow.” As the industry leader, extreme volatility in NVIDIA (NVDA) often drags the entire Philadelphia Semiconductor Index (SOX) down, regardless of the individual earnings. Even though NVIDIA reported its own record-breaking results earlier this year, the stock remains highly volatile.
Currently, AVGO is testing key technical support levels and is at risk of breaking below the $300 psychological floor. However, with a newly authorized $10 billion share repurchase program, the company has significant ammunition to buy back its own shares, which could help stabilize the price and defend its valuation against further market swings.
