Broadcom stock (NASDAQ: AVGO) has fallen about 21% from its early-June peak even as the chipmaker continues to post the fastest AI growth in the semiconductor industry.
The stock closed at $380 on Tuesday, down 3.2% for the session and well below its June 2 record close of $481.57.
The slide accelerated after fiscal second-quarter results failed to clear an exceptionally high Wall Street bar.
That disconnect is at the centre of the debate. TipRanks contributor Nova Capital values Broadcom at $585.90, implying roughly 54% upside from Tuesday’s close.
The analyst argues that the market has punished the company too heavily for an earnings report that still showed extraordinary growth.
Broadcom’s problem may be expectations, not AI demand
Broadcom’s fiscal second-quarter revenue rose 48% year on year to a record $22.2 billion, while AI semiconductor revenue jumped 143% to $10.8 billion.
Chief Executive Hock Tan said AI semiconductor sales should reach $16 billion in the third quarter, representing growth of more than 200%.
The disappointment was relative. Wall Street had expected about $17.2 billion of third-quarter AI revenue, while analysts were modelling roughly $114 billion for fiscal 2027.
Broadcom instead reiterated its target for more than $100 billion.
Cantor Fitzgerald analysts led by C.J. Muse told MarketWatch that investors were disappointed by the softer AI outlook, gross-margin guidance and the decision merely to reiterate the 2027 target.
Cantor nevertheless kept an Overweight rating and $525 price target.
The 55% bull case has company on Wall Street
Nova Capital argues the selloff has gone too far.
“Overall, the earnings update for fiscal Q2 wasn’t as bad as the market perceived it,” Nova told TipRanks, pointing to Broadcom’s custom-chip expertise and dominant position in high-end networking. Applying roughly 30 times fiscal 2027 earnings produces his $585.90 valuation.
That target looks aggressive, but it is close to JPMorgan’s view.
Analysts Harlan Sur and Mayur Ramdhani said they would be “aggressive buyers” after Broadcom’s June decline.
JPMorgan maintained an Overweight rating and $580 target, citing Broadcom’s intellectual property, custom-chip capabilities, Google relationship and networking leadership.
Oppenheimer analyst Rick Schafer has also remained bullish. Barron’s reported that Schafer described management’s tone as “bullish” and said Broadcom had a clear line of sight into 2026 deployments.
Google risk keeps the valuation debate alive
The bull case is not without an obvious weakness.
Macquarie downgraded Broadcom to Neutral after the June report and cut its price target to $437 from $513, citing Google’s push to develop more AI-chip capabilities internally.
The firm expects Broadcom’s share of that business to decline meaningfully in 2027.
That matters because custom AI accelerators are central to Broadcom’s long-term growth story.
The company helps hyperscalers design specialised chips while also supplying networking technology connecting increasingly large AI clusters.
Expectations remain demanding enough that simply meeting guidance may not be sufficient to restart the rally.
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