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Broadcom's Whiplash: Shares Tank After Pre-Earnings Surge
Submitted by Leo Miller. Publication Date: 6/5/2026.
Key Points
- Broadcom shares picked up a huge amount of steam going into its earnings report, but that steam let off after earnings.
- Despite beats across the board on headline metrics, Broadcom's AI outlook was less spectacular than expected.
- Nonetheless, Broadcom's business is chugging, with the firm guiding for its highest growth in nearly a decade next quarter.
- Special Report: The Biggest IPO Ever: Claim Your Stake Today
Shares of semiconductor giant Broadcom (NASDAQ: AVGO) have been red hot in Q2. As of the June 3 close, Broadcom shares were up 55% for the quarter.
At that point, Broadcom was on track to deliver its second-best quarterly performance ever, trailing only a 65% gain in Q2 2025.
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See the 5 stocks to avoidHowever, after the company’s latest earnings report, it now appears unlikely that Broadcom will break that record. Shares dropped by approximately 13% in the trading day following Broadcom’s report, falling below $420.
Although Broadcom beat estimates across its top-line figures, there were some notable cracks in the report that were difficult to overcome given the extremely high expectations.
Broadcom Beats, AI Guidance Falls Short
In its fiscal Q2 2026 report, Broadcom posted revenue of $22.19 billion, an increase of 48% year-over-year (YOY). That slightly exceeded estimates of about $22.13 billion. On adjusted earnings per share (EPS), the company posted $2.44, an increase of 54% YOY, and also slightly topped estimates of $2.40.
Broadcom's adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) margin came in at 69%. That exceeded the company’s guidance of 68% and analyst expectations of 68.6%.
Broadcom’s artificial intelligence (AI) semiconductor revenue rose sharply by 143% YOY to $10.8 billion, and the firm expects growth to accelerate next quarter. In Q3, Broadcom projects AI semiconductor sales of $16 billion, or an increase of 200% YOY.
Despite that monstrous growth outlook, Broadcom’s AI semiconductor guidance was seen as one of the biggest negatives in the report. Wall Street analysts had expected the figure to come in near $17.2 billion.
Nonetheless, Broadcom’s overall guidance for Q3 came in above expectations. The company projects that revenue will grow by 84% YOY to $29.4 billion, well above the expected $28.25 billion.
Overall, these numbers were solid—but solid wasn’t what Broadcom needed. In the seven trading days leading up to its report, Broadcom surged more than 15%, adding around $300 billion to its market capitalization. That raised the stakes. Broadcom needed to blow investors away to see its shares extend the rally. With modest beats for the quarter and a miss on AI semiconductor guidance, Broadcom didn’t clear that elevated bar.
Tan Stays Consistent, Holds Back on 2027 Outlook Boost
Another source of disappointment was Broadcom’s refusal to raise its AI semiconductor guidance for 2027. It continued to guide to more than $100 billion, but investors likely hoped to see that number move higher. Competitor Marvell Technology’s (NASDAQ: MRVL) recent guidance increase was probably a factor behind that expectation, along with the run-up in AVGO shares.
Amid this, it is important to understand that Broadcom’s management team moves at its own pace—not at the pace markets or analysts want it to move. Broadcom tends to guide conservatively until it has a major announcement to make. CEO Hock Tan has repeatedly pushed back on analyst attempts to gain greater visibility into Broadcom’s revenue outlook.
In some cases, Tan has pushed back forcefully. During the Q2 call, Tan told JPMorgan analyst Harlan Sur, “We're not trying to guide you every quarter on what 2027 would be like." In other words, expecting Broadcom to raise 2027 guidance, especially with two quarters still remaining in 2026, is somewhat unrealistic. When shares surge into a report, that stance can clash with investors’ psychology, especially when they want blockbuster numbers right away.
Additionally, many of Broadcom’s customer relationships are very long-term. Broadcom designs multiple generations of customized AI chips for its partners, which operate on their own timelines. As a result, its revenue may not scale cleanly from one quarter to the next, creating the potential for AI semiconductor guidance misses like the one seen in Q3.
Tan’s Statements Add Weight to Alphabet Diversification Concerns
Still, statements made about Broadcom’s relationship with Alphabet (NASDAQ: GOOGL) were a bit concerning. Notably, the companies have extended their long-term partnership for Broadcom to help develop Alphabet’s tensor processing units (TPUs). However, that doesn't mean Alphabet can’t also collaborate with other companies on TPUs.
For example, MediaTek (OTCMKTS: MDTKF) is also doing work on TPUs. Hock Tan noted that while Broadcom’s agreement with Alphabet is “very, very strong… we fully expect that there will be some diversity of sources for them." In other words, Tan more or less confirmed that Broadcom is not Alphabet’s only TPU partner.
Broadcom Eyes Historically Strong Growth as Shares Take a Hit
Overall, Broadcom did not deliver the quarter that investors were betting on as they bid up shares. Still, the company expects revenue to grow by 84% YOY next quarter, the firm’s second-highest quarterly growth rate since 2017. Broadcom expects AI semiconductor growth of 200% to drive that result. Despite Broadcom not living up to sky-high expectations, it's hard to argue that its business isn't firing on all cylinders in 2026.
SpaceX IPO: Opportunity? Or the Ultimate Hype Trade?
Submitted by Chris Markoch. Publication Date: 5/22/2026.
Key Points
- SpaceX filed its S-1 ahead of a June 12 Nasdaq debut under ticker SPCX.
- Starlink, not rocket launches, is the company’s primary recurring revenue engine.
- Investors must weigh massive growth potential against valuation and governance risks.
- Special Report: The Biggest IPO Ever: Claim Your Stake Today
Many investors have been waiting for an opportunity to invest in SpaceX (NASDAQ: SPCX), Elon Musk’s space-focused company. The wait is almost over. SpaceX is expected to make its debut on the Nasdaq exchange on June 12, 2026, under the ticker symbol SPCX.
But first, the company had to deliver the goods to the institutional investors who will put a valuation on SPCX. That got one step closer to reality when SpaceX filed its public S-1 on May 20.
Generational Opportunity or Hype Trap?
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The Wall Street Journal is already raising the alarm about a potential market crash, and Weiss Ratings research points to the first half of 2026 as a particularly rough stretch for certain holdings.
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If any of these are in your portfolio, now is the time to review your positions.
See the 5 stocks to avoidInvestors have been wondering whether SpaceX is a generational opportunity to invest in the space economy or simply a hype trap. Arguing for the former is data from a study by the World Economic Forum and McKinsey & Company that forecasts the space economy will grow from $630 billion in 2023 to $1.8 trillion by 2035.
Arguing for the latter is the commentary surrounding the company’s founder and chief executive officer, Elon Musk. It’s not that investors question Musk’s ability. Rather, there are concerns about how much bandwidth Musk can have while he’s still running Tesla (NASDAQ: TSLA) and X, among his other endeavors.
Musk himself is no stranger to hype. In one part of the S-1 filing, Musk cited SpaceX’s total quantifiable addressable market (TAM) at $28.5 trillion. That's a staggering number rooted in $22.7 trillion in enterprise applications.
That number is ambitious. And it’s just the kind of number Musk is using to defend a raise of up to $75 billion at a valuation between $1.75 trillion and $2 trillion. That would make it the largest initial public offering (IPO) in history.
What's Actually Driving the Business
Before accepting or rejecting Musk's vision at face value, though, investors should understand what is actually generating revenue today. SpaceX operates two distinct business lines that tell very different stories.
The first is the launch business (i.e., rockets, satellites, and government contracts), which is the company's founding mission and still its most visible product. SpaceX has achieved something no private company has before: a reusable rocket system that has dramatically lowered the cost of reaching orbit and given the firm a near-monopoly on heavy-lift launch capacity in the United States. NASA, the Department of Defense, and commercial satellite operators all depend on it.
The second, and far more important business from a pure revenue standpoint, is Starlink—the company's low-Earth orbit satellite internet service. Starlink is the profit engine that holds the enterprise together. It has scaled to millions of subscribers across more than 100 countries, generating recurring subscription revenue that the launch business, for all its strategic importance, cannot match on its own.
Without Starlink's cash flow, SpaceX's ambitions in Mars colonization and point-to-point transport would be far harder to finance. Investors should think of SpaceX less as a rocket company and more as a vertically integrated space infrastructure business where Starlink funds the moonshots.
The Governance Question Investors Can't Ignore
The S-1 confirms what many expected: Elon Musk retains overwhelming voting control of SpaceX through a dual-class share structure. This is not unusual in the technology world—Meta Platforms (NASDAQ: META), Alphabet Inc. (NASDAQ: GOOGL), and Snap Inc. (NYSE: SNAP) all went public with similar arrangements. However, it carries specific risks that SpaceX investors need to price in.
In practical terms, it means public shareholders will have limited ability to influence the company's direction, compensation decisions, or strategic pivots. If Musk decides SpaceX should accelerate its Mars program at the expense of near-term profitability, minority shareholders cannot stop him.
This also ties back to the bandwidth concern. If Musk’s attention is divided—between Tesla, xAI, X, and whatever comes next—the board has no structural mechanism to intervene. Investors who are accustomed to traditional corporate governance protections should go in with clear eyes on this point.
What to Watch on and After June 12
IPO-day price action is rarely a reliable signal of long-term value, and SpaceX is likely to be one of the most volatile debuts in market history. Retail investors who cannot access shares at the offering price will face the choice of either buying into what could be significant first-day euphoria or waiting for a more rational entry point after the lock-up period expires and early institutional holders can sell.
The metrics that will matter most in the first 90 days are Starlink subscriber growth, launch cadence, and any updates on government contract renewals. These are the numbers that will tell investors whether the underlying business justifies the valuation, or whether the $2 trillion price tag is doing what Musk's TAM number did: making something enormous sound inevitable.
SpaceX may well be the space trade of the decade. But the best trades are made with discipline, not enthusiasm. For now, watching closely is a perfectly rational position.
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