Broadcom shares fell up to 14% after Q2 results, as CEO reiterated ambiguous full-year AI chip revenue guidance of 'in excess of $100 billion' rather than raising it.

Broadcom reported Q2 revenue of $22.2 billion, up 48% year over year and above estimates, but CEO Hock Tan only reiterated the company's full-year AI chip revenue guidance of 'in excess of $100 billion' from Q1, disappointing investors who expected a raised forecast.

The article characterizes the stock decline as a 'right-pricing' correction rather than a sign of AI industry weakness: Broadcom shares trade at 37 times this year's expected earnings and 22 times next year's projected earnings, while the 'Magnificent Seven' AI-linked stocks have an average forward price/earnings ratio of 26.3 versus 19.2 for the rest of the S&P 500.

Even at the lowest estimate of $100 billion in AI chip sales, that represents at least 56% revenue growth ahead, since last year's total revenue was $63.9 billion with roughly 40% coming from software.