Broadcom’s stock dropped 3.4% to $393.02 on Thursday. The decline occurred as the broader semiconductor sector pulled back, with the Technology Equipment index falling 2.33%.
Trading volume reached 16.32 million shares, below the average daily volume of 23.12 million. The stock’s session range moved between $386.74 and $399.00. Its market capitalization now stands at $1.88 trillion.
The company’s 52-week high of $495.00 was set on June 3, 2026, while its low of $273.00 came on July 23, 2025. At Thursday’s close, the price sat 20.6% below its recent peak and 43.9% above its 12-month low.
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The AI paradox: rapid growth, modest returns
The decline mirrors broader doubts about AI-driven valuations, especially as the 10-year Treasury yield rose to 4.60%, approaching a two-month high. Broadcom’s financials reveal a contradiction: its AI semiconductor revenue grew 143% year over year, yet its stock has climbed only 13% in 2026—lagging peers like TSMC and Amazon.
The gap emerged after a single earnings call. Following record revenue, operating profit, and free cash flow in June, CEO Hock Tan avoided raising the company’s full-year AI chip sales target of $100 billion. The stock plunged 15% the next day, wiping out $485 billion in market value.
Similar reactions occurred elsewhere. TSMC increased its 2026 capital expenditure to $60–64 billion but saw its stock dip 2%. GE Aerospace raised its full-year guidance by $700 million and still fell 4%. Investors appear unwilling to reward positive news in the AI sector, particularly when it involves long-term commitments.
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Broadcom faces a unique challenge. The company is the only AI infrastructure name whose bookings run three times its shipments and whose stock is up 13% year to date. The reason it is priced at a discount is that its three largest customers are all building their own chips. At 24.37x forward earnings against a $30 billion booking quarter, this is where the AI trade is priced for failure.
The tension lies in this mismatch: a company with clear demand visibility and multi-year agreements with hyperscalers is valued like a cyclical hardware business. The discount reflects duration risk, the same force repricing all AI infrastructure stocks as borrowing costs climb.
$30 billion in bookings, $10.8 billion shipped
Broadcom’s second-quarter AI bookings reached $30 billion. The backlog isn’t just large—it’s growing. In December, the company reported an 18-month AI backlog of $73 billion.
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Management has been clear about timing. The $30 billion in bookings won’t generate revenue immediately, as most orders are scheduled for 2027. That’s the issue: the market discounts future cash flows at 4.6%, reducing the value of deferred revenue.
The supply chain remains strong. Broadcom says it can meet demand through 2027.
Broadcom’s stock may appear undervalued, but risks remain. The market questions the durability of its AI backlog and investor patience for 2027 revenue. For now, the company stands as a leader in AI infrastructure, trading at a discount because the wins are still too distant to count.
