Broadcom Q2 FY2026: Why a Blowout Report Still Sent the Stock Down 10%

Broadcom just delivered another strong earnings report for Q2 fiscal 2026, and the stock fell more than ten percent. CSI breaks down exactly why that happened, what it means for long-term holders, and whether anything has actually changed in the fundamental thesis for one of the most important companies in AI infrastructure.

Broadcom has compounded its enterprise value at over fifty percent annually for five years. AI semiconductors now represent roughly three-quarters of the semiconductor solutions segment, which itself makes up the majority of nearly forty-eight billion in trailing twelve-month revenue. Free cash flow hit a record dollar amount this quarter at a forty-six percent margin, still climbing toward its near-fifty percent record high.

So why did the stock sell off? The short answer is that Wall Street wanted a raise in 2027 guidance, specifically whether Broadcom's forecast of over one hundred billion in AI semiconductor revenue for fiscal 2027 would be revised higher toward two hundred billion. CEO Hock Tan declined to update that number, and without a concrete revision, earnings expectations stayed flat.
Infrastructure software, the VMware segment, is now a cash cow with sub-ten percent growth. The growth engine going forward is AI semiconductors and networking. Chip Stock Investor's position is unchanged, continuing to hold Broadcom as a core AI data center infrastructure name.

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