AVGO Stock Extends Post-Earnings Selloff: Analysts, Retail Expect Strong Rebound

• Investors reacted negatively to the AI chipmaker’s decision to leave its fiscal 2027 AI revenue target unchanged.
• Broadcom reported second-quarter sales and the forecast for the current quarter above market expectations.
• Stocktwits sentiment for AVGO was ‘extremely bearish’ (99/100) on Thursday morning.

Broadcom shares plunged more than 12% in early premarket trading Thursday as investors reacted negatively to the AI chipmaker’s decision to leave its fiscal 2027 AI revenue target unchanged despite delivering an upbeat second-quarter performance.

Still, analysts rushed to raise their price targets, arguing that Broadcom’s $100 billion AI chip sales forecast appears deliberately conservative and is likely to be easily surpassed.

Analysts' View On AVGO

“Shares fell… as investors hoped for higher guidance in 2027 and beyond. We believe Broadcom is guiding conservatively, and see the $100 billion fiscal 2027 target as a sandbag,” Morningstar analysts said in their investor report.

“Management expects to ship capacity for 10 gigawatts of compute in 2027, and we believe it will earn well above $10 billion per gigawatt.” Morningstar raised its price target on the stock to $650 from $550, implying an expected 36% rise.

Chip sales to Anthropic and OpenAI appear poised for a ramp-up in 2027 and 2028, making for a relatively softer 2026 (still nearly 200% growth), the research firm said, adding that it models $200 billion in AI chip revenue in fiscal 2028.

Jefferies also raised its price target on the stock to $550 from $500, while maintaining a ‘Buy’ rating. The research firm expects Broadcom’s operating margins to still improve as AI revenue accelerates. 

In April, Broadcom announced a long-term agreement to develop and supply future generations of Google’s Tensor Processing Units (TPUs) and provide networking components for Google’s next-generation AI racks. It also expanded its multi-year partnership with Meta to co-develop future generations of Meta’s MTIA AI accelerators. 

The company has a similar deal with OpenAI to supply 10 gigawatts of custom AI accelerators, which was announced last October.

Retail View On AVGO

On Stocktwits, the retail sentiment for AVGO climbed several points to nearly the highest possible level in the ‘extremely bullish’ category (99/100). Traders all but dismissed concerns and expected a rebound soon.

“$AVGO More than 300 billions are gone in market cap in one session. This is unreal. Recovery will be powerful and it could happen by Friday,” a trader wrote.

Another wrote: “Did a deep dive on AVGO earnings. Over reaction imo. OpenAI, Anthropic, plus Apollo Blackstone contract. with this gap down trading at less than 0.7 PEG. THIS IS BUY THE DIP opportunity. As future XPU incorporates HBM/GPU margin will go up. Apollo contract only beginning.” 

AVGO Q1 Results Recap

Broadcom’s revenue climbed 48% from $22.19 billion, beating analysts’ estimate of $22.13 billion. Net profit rose to $9.31 billion from $4.97 billion a year ago. On an adjusted basis, profit of $2.44 per share was also higher than the $2.40 target.

For the third quarter, Broadcom forecasts overall revenue of $29.4 billion, compared with analysts’ projection of $28.25 billion.

“We expect this momentum to continue into fiscal year 2027 and reiterate our AI semiconductor revenue guidance to be in excess of $100 billion,” CEO Hock Tan said.

Broadcom shares are up close to 40% this year as of Wednesday’s close, topping the Nasdaq’s 16% gain.

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