Broadcom $AVGO ran into the classic problem of "expectations that were too high." The numbers on paper looked good - revenue of $22.19 billion slightly above consensus, earnings per share of $2.44 above estimates, and revenue guidance for the next quarter even higher than the market expected - but the key was in the AI-related details.

Investors had set the bar for AI chips extremely high: the AI semiconductor segment did grow year-over-year in Q2 by ~143%, but for Q3 Broadcom "only" forecast AI chip sales of around $16 billion, while the market wanted roughly $17.2 billion. Additionally, the company did not raise its overall AI chip revenue outlook for 2026, even though CEO Hock Tan confirmed the target of >$100 billion in cumulative AI revenue by 2027.