On June 4, 2026, semiconductor giant Broadcom (AVGO) delivered a quarterly earnings report that was impeccable across many dimensions, yet its stock price crashed over 15% in the subsequent trading session, marking its largest single-day drop since January 2025 and wiping out approximately $320 billion in market cap. Record revenue, earnings per share exceeding expectations, and 143% year-over-year growth in AI revenue—these numbers were impressive enough on their own, but they couldn’t stop the market from casting a vote of no confidence.
For investors in the crypto and Web3 space, this event matters far beyond a single day’s fluctuation in one stock. AVGO’s 15% plunge serves as a warning light for the "perfect pricing" risk in the AI semiconductor sector and a window into the current shift in macro valuation logic. What’s more noteworthy is that—through Gate’s new US stock trading feature—investors can now directly trade this highly volatile asset using USDT.
Breaking Down the Data: Where Exactly Was the Report "Good"?
Broadcom’s fiscal second-quarter earnings report for the period ending May 3, 2026, looked outstanding by any traditional financial metric.
Record top-line performance: Total revenue reached $22.19 billion, up 48% year-over-year, significantly accelerating from last quarter’s 29% growth and slightly beating the analyst consensus estimate of $22.03 billion by about 0.68%. Non-GAAP earnings per share came in at $2.44, up 54% year-over-year, also exceeding market expectations of $2.40.
AI semiconductors as the absolute growth engine: This was the segment most closely watched by the market. AI semiconductor revenue hit $10.8 billion, up 143% year-over-year, beating the company’s own guidance. This scale means that the AI chip business line alone now accounts for nearly half of the company’s quarterly total revenue.
Order backlog signals future strength: New AI semiconductor orders added over $30 billion this quarter, far exceeding the $10.8 billion in revenue recognized during the period, indicating sustained long-term demand commitments from hyperscale customers.
Q3 revenue guidance beat expectations: The company expects fiscal third-quarter total revenue of approximately $29.4 billion, up 84% year-over-year, exceeding Wall Street’s expectations of $27.17 billion by about 8.2%. AI semiconductor revenue is projected at $16 billion, up over 200% year-over-year.
These numbers clearly paint a picture of AI infrastructure investment that is still accelerating. CEO Hock Tan reaffirmed the long-term target of over $100 billion in AI semiconductor revenue for fiscal 2027 during the earnings call. Yet the market was not convinced.
Root Cause of the Plunge: The Three-Layer Logic of the "Expectation Gap"
To summarize the market’s disappointment in one sentence: The expectation gap wasn’t about "whether the results were good," but rather "whether the surprise was big enough." The failure of this pricing logic can be analyzed at three progressive levels.
AI Guidance Not Raised—"No Surprise Means Bad News"
This was the core pricing fracture point of the quarter. As early as last quarter, Broadcom had already provided forward guidance of $56 billion in AI semiconductor revenue for fiscal 2026 and over $100 billion for fiscal 2027. In this quarter’s report, management chose to directly reaffirm that guidance rather than raise it further.
In a context where the stock had already risen about 55% in one quarter and the forward P/E ratio had surged to approximately 87x, the market’s threshold for "surprise" had been pushed to an extreme. AI semiconductor guidance for Q3 came in at $16 billion, up over 200% year-over-year, but below some buy-side expectations of $17.2 billion. That analyst expectation gap was the direct trigger for the 15% crash.
High Valuations Punish Minor Misses
The more fundamental reason for the stock’s plunge is that the market had already fully priced in all optimistic factors. Any report that falls short of "perfect expectations" triggers an asymmetric penalty.
In the five trading days before the earnings release, AVGO shares had hit consecutive all-time highs—a sign that expectations were fully priced in. Angelo Zino, Senior Vice President at CFRA Research, commented: "The bar was set too high before the release, and the stock reaction you’re seeing now largely points to that."
Analyzing the relationship between valuation and the magnitude of the adjustment reveals: If a company trades at 50x forward earnings, and the market’s implied expectation for AI growth is that guidance accelerates every quarter, then a quarter where guidance is flat or only "barely above" constitutes an expectation gap. When this gap occurs, the compression of valuation multiples often happens much faster than the downward revision of earnings expectations. This multiplier effect was especially pronounced in AVGO—revenue only slightly missed some expectations and guidance wasn’t raised, yet the market used a 15% decline to "reprice" the stock.
Macro Context: Sticky Inflation Limits Tolerance for High Valuations
Another variable to consider is the macro interest rate environment. In April 2026, the US headline PCE inflation rose to 3.8% year-over-year, with core PCE at 3.3%. Both indicators remained above the Fed’s 2% target. After Kevin Warsh took over as Fed Chair, the "higher for longer" policy stance was further reinforced, directly compressing the reasonable multiple ranges for all high-growth, high-valuation sectors.
If interest rates stay elevated for a longer period, the discount rate for high-multiple stocks rises, putting downward pressure on future earnings expectations. This forms a macro backdrop for AVGO’s crash—even without fundamental deterioration, rising capital costs can trigger sell-offs.
Potential Structural Risks in the Custom ASIC Ecosystem
Another issue worth long-term attention arising from this earnings report is the evolution of the custom AI chip market landscape.
During the earnings call, Hock Tan acknowledged that major customers are seeking to diversify their AI chip suppliers, widely interpreted as Google shifting some TPU chip design orders away from Broadcom to other vendors.
Asian brokerage firms expect Broadcom’s share of Google TPU-related revenue to drop from about 95% in 2026 to 80% in 2027 and further to 65% in 2028. Based on this, Macquarie analyst Arthur Lai downgraded Broadcom from "Outperform" to "Neutral" and cut the target price from $513 to $437, citing expectations of Google moving towards in-house development and alternatives like MediaTek.
The impact of this risk on valuation needs to be assessed at two levels.
Short term (1-2 years): The $30 billion order backlog and locked-in capacity arrangements mean the actual impact is limited. However, Google’s pivot represents a deeper industry trend—hyperscale cloud providers are gradually moving custom AI chip development from third-party design partners like Broadcom/Marvell in-house, which could alter the TAM structure over a five-year horizon.
Long term (3-5 years): If Google’s TPU supply chain diversification continues, Broadcom’s market share in the ASIC space will face structural erosion. However, the market should remain cautious—currently, there is no official confirmation that MediaTek has secured substantial orders for Google’s next-generation TPUs.
Therefore, this is an uncertainty variable that needs to be factored into valuation considerations, but near-term actual loss expectations should not be overstated.
Analyst Divergence: Two Narratives in the Sell-Off
Market divergence often hides the most valuable trading signals. The current distribution of Wall Street ratings on AVGO presents a fascinating binary structure.
Bull camp (majority): Multiple institutions raised their price targets after the earnings report. Mizuho increased from $480 to $530, viewing the sell-off as a buying opportunity; Jefferies raised its target to $550; Morningstar was the most optimistic, increasing fair value from $550 to $650. The consensus analyst rating remains "Strong Buy," with price target ranges clustering around $490-$511.
Bear camp (minority but with clear risk signals): Macquarie was the only major bank to significantly downgrade the rating, moving from "Outperform" to "Neutral" with a target of $437, representing an expectation gap of about $93 compared to Mizuho’s $530 target. The core of this divergence is the differing assessment of risk from Google’s supply chain diversification.
Additionally, even bullish analysts generally acknowledged that Q3 AI semiconductor guidance ($16 billion) fell short of some expectations. Cantor Fitzgerald noted that the July quarter AI revenue outlook was about 6.4% below its $17.1 billion estimate.
For traders on the Gate platform, this divergence itself creates opportunities for volatility trading—whether through long-short directional plays or volatility arbitrage—and the tradability of US stocks has been expanded on the Gate platform.
The Supply Chain Contagion Effect of Broadcom’s Plunge
AVGO’s single-day 15% drop also triggered a chain reaction of revaluation across the entire AI semiconductor ecosystem.
Competitor dimension: If Broadcom does face the risk of losing market share due to Google’s supply chain diversification, Marvell could benefit as an alternative. MediaTek is also seen as a potential winner from this trend, but confirmation requires clearer order information.
Valuation bubble mapping: AVGO’s post-earnings crash exposes a more systemic issue—current valuations for AI-related semiconductor companies already fully discount a scenario of "continuously beating expectations." Any quarterly report that fails to deliver an upward revision trend could trigger a similar valuation compression mechanism. This logic applies equally to Nvidia and other AI computing chain companies.
Sector rotation signal: The day after the earnings release, tech stocks broadly came under pressure, while Dow Jones Industrial Average futures rose by about 479 points, indicating capital rotation from high-beta tech stocks to low-beta industrial stocks. This kind of intra-sector reallocation is a typical feature of a bull market, but for short-term AI sector holders, the signal cannot be ignored.
Gate Platform Stock Trading: Seizing Opportunities Amid Volatility
Every deep correction in the semiconductor supply chain often breeds structural entry opportunities. However, for crypto market users, participating in US stock trading traditionally involves numerous barriers: complex US stock account opening processes, long cross-border fund transfer times, and high single-share prices that limit small-scale investments.
Gate’s recently launched US stock trading feature changes this landscape from three dimensions.
Fractional share trading breaks down capital barriers: Gate supports buying as little as 0.01 shares. At AVGO’s current price of around $405 per share, investors need only about $4 to gain exposure to Broadcom stock, significantly lowering the entry threshold for high-quality AI semiconductor assets.
Direct USDT trading avoids FX and transfer costs: Users don’t need to open a traditional US stock account; they can directly use USDT for transaction settlement, eliminating the time and cost of fiat currency conversion and cross-border transfers. This mechanism integrates crypto assets with traditional US stocks within a unified account system, enabling instant cross-asset allocation.
Flexible intraday response mechanisms: Gate has launched pre-market and after-hours trading functionality, extending US stock trading hours from the standard 6.5×5 to 16×5. For major events like earnings releases that often occur outside regular trading hours, Gate users can react immediately instead of waiting for the next day’s opening.
Conclusion
Broadcom’s "record revenue + 15% stock crash" this quarter may seem contradictory, but it reveals a key turning point in AI semiconductor investment in 2026: The market is no longer satisfied with earnings merely "beating expectations"; it demands continuous upward guidance revisions. It no longer looks only at absolute growth numbers but simultaneously evaluates valuation multiples and the interest rate environment. It no longer focuses solely on a single quarter’s performance but examines long-term customer relationships and structural changes in market share.
This is not a signal of fundamental deterioration, but a signal of pricing logic shifting. For investors in the crypto market, Gate’s new US stock trading feature provides a tool for flexible allocation during this window of pricing reconstruction—whether you are inclined to find opportunities in AVGO’s current valuation divergence or use it as a barometer for the overall AI semiconductor pricing system. The pace of Google’s supply chain diversification, the progress of actual orders by MediaTek, and subsequent changes in the Fed’s interest rate policy are all uncertainty variables that need continuous tracking.
