Bank of America Resets Broadcom Stock Price Target After Earnings

Broadcom’s AI Revenue Letdown Triggers a 15% Single‑Day Crash

Bank of America reset its Broadcom stock price target on June 3, 2026, after the company’s fiscal second‑quarter earnings delivered an AI revenue outlook that fell well short of the market’s overheated expectations. Broadcom’s stock tumbled 15% on the day, its steepest one‑day loss since January 2025, dragging the entire semiconductor sector into a sharp selloff.

The drama wasn’t about a weak quarter. Broadcom’s overall revenue guidance came in above Wall Street’s consensus. But the company’s forward‑looking artificial‑intelligence chip revenue — the piece of the business that had supercharged the stock’s rally — landed below what analysts and traders had priced in. In a market where AI‑linked names had been sprinting, merely jogging felt like a fall.

What Went Wrong With the AI Outlook?

Broadcom designs custom AI accelerators for major cloud customers and is a key partner of Nvidia, offering networking chips that keep data‑center GPUs fed. For months, investors had extrapolated exponential growth from the AI capex wave. When Broadcom chose to reiterate rather than raise its full‑year 2026 guidance, the disappointment rippled instantly.

“The issue was the AI outlook,” noted Yahoo Finance’s Jared Blikre. “Broadcom’s next‑quarter AI revenue guide came in below elevated expectations, even as overall revenue guidance topped estimates.” The stock that had become a bellwether for enterprise AI suddenly became a cautionary tale.

Analysts React: Price Targets Cut After Broadcom Earnings

Bank of America’s equity research team moved quickly, joining a chorus of brokerages trimming their numbers. The bank’s refreshed Broadcom stock price target reflected a more measured near‑term view, dialing back the feverish optimism that had pushed the shares to record highs. In plain terms, the new target still suggests long‑term value, but the path upward now looks bumpier than it did a week ago.

The analyst rating update wasn’t a panicked downgrade — Bank of America and most peers kept their “buy” or “outperform” ratings. Yet the reset signals a classic post‑earnings recalibration: strong fundamentals, but the stock had gotten ahead of itself. As one strategist told Business Insider, “Chip stocks finally hit a speed bump, and much of Wall Street pressed the brakes on its extended rally.”

Not every research desk pulled back. Morgan Stanley, for example, lifted its SanDisk price target to $1,750 from $1,100, arguing that memory demand remains robust. But for Broadcom, the immediate reaction was a sharp repricing. The message from equity research: the AI boom is intact, but not every name deserves a gravity‑defying valuation.

Semiconductor Selloff Ripples Through the Market

The selling wasn’t contained. As the data visualization below shows, the one‑day damage on June 3 moved the entire semiconductor complex into the red.

As we covered in our earlier analysis of the memory chip selloff, high‑flying storage names have been especially volatile. SanDisk, which earlier posted a 1% dip on the day, has been under pressure as memory‑focused ETFs tumbled 6%. You can find the full breakdown in our detailed SanDisk piece.

Even cybersecurity felt the tech chill. CrowdStrike shares fell 10% after its own earnings, adding to the bearish mood. The intertwining of AI, chips, and cloud security meant no corner of the trade was safe.

What the Selloff Means for the AI Trade

Is this the beginning of a bust? Probably not. Strategists pointed to a classic pattern: a blistering six‑week rally needed to exhale. Interactive Brokers’ chief strategist Steve Sosnick called the recent euphoria “borderline mania, if not actual full‑fledged mania,” but noted that much of the surge was grounded in better‑than‑expected earnings and guidance. The question he posed: “Were we that mispriced six weeks ago? Are we that mispriced now?”

The pullback feels more like a speed bump than a derailment. Bank of America’s new Broadcom target doesn’t signal a broken AI story; it signals a price reset after a parabolic move. The firm, like many on Wall Street, still sees the AI‑chip cycle as a multi‑year force. Yardeni Research raised its year‑end S&P 500 target to 8,250 from 7,700 just last week, citing consensus earnings estimates that had surged “well beyond already bullish forecasts.”

What’s worth watching: the market is now distinguishing between AI names with unassailable moats and those that rode the wave on momentum. Broadcom isn’t out of the game — it’s a top‑tier AI infrastructure supplier — but the reset reminds investors that not every chip stock is Nvidia, and even Nvidia can take a 1% breather.

Conclusion

Broadcom’s post‑earnings 15% dive was a reckoning, not a collapse. AI revenue guidance came in short of a sky‑high bar, and Bank of America joined other firms in pulling its price target back to earth. The selloff swept through the semiconductor complex — from Micron to AMD to Qualcomm — yet the iShares Semiconductor ETF remains up 88% this year, a staggering return that hints the AI trade still has plenty of believers.

Bank of America’s call reflects a sensible re‑calibration: the long‑term demand for custom AI chips and networking gear is real, but valuations after a historic rally needed to cool. For market watchers, the lesson is clear: in a sector this hot, even a single disappointing forecast can trigger a chain reaction. The smart money is likely using the dip to reassess which names can actually sustain the AI revenue trajectory — and which ones can’t.

The data visualization below drives home the breadth of June 3’s moves. Broadcom led the decline, but every major name felt the sting. That uniformity suggests the market is now pricing AI risk more evenly across the sector, a healthy development after months of concentrated euphoria.