Key Highlights

  • Broadcom fell 5.48% to $326.08 on October 30, 2026.
  • DA Davidson upgraded the stock to buy with a $400 price target.
  • AI semiconductor Revenue jumped 221% to $16.7 billion last quarter.
  • Broadcom guided fiscal fourth-quarter revenue to about $34.8 billion.

Why did Broadcom (NASDAQ:AVGO) drop 5.48% to $326.08 on Friday, on Volume about 1.75 times normal, even after a Wall Street firm upgraded the stock that morning? Because the whole semiconductor group was being sold at once. Intel (NASDAQ:INTC)'s weak fourth-quarter forecast and Amazon (NASDAQ:AMZN)'s rising spending plans set off a sweeping chip sell-off that dragged the Philadelphia Semiconductor index down 7.2%, according to a closing market summary. In that environment, a bullish note from DA Davidson was not enough to keep Broadcom, one of the largest AI chip suppliers, out of the downdraft.

A sector-wide sell-off

Intel's shares fell almost 29% after it guided fourth-quarter revenue to $15 billion to $16 billion, below analyst expectations, and warned of a continuing PC slowdown driven by memory prices and availability. Amazon, meanwhile, reported a sharp cash outflow in the third quarter and signaled another increase in Capital spending next year. Market reports said the two companies had raised concerns about the rising cost of the AI buildout and the timeline for returns. The same reports also cited expectations that the Federal Reserve will raise rates by more than 50 basis points by mid-2027, which could make debt-funded spending harder to justify.

The damage was broad. Nvidia (NASDAQ:NVDA), AMD (NASDAQ:AMD), Micron (NASDAQ:MU), Marvell (NASDAQ:MRVL), Arm (NASDAQ:ARM) and Qualcomm (NASDAQ:QCOM) all fell sharply, and market reports said investors were weighing big tech earnings, signs of a deeper PC slump, memory shortages and whether AI infrastructure spending is paying off. The Nasdaq-100 closed down 3.46%. By the close, Broadcom's decline was milder than Marvell's 10.05% drop, which was tied to deal reports, but steeper than the 1.82% fall in the S&P 500.

The upgrade that did not help

DA Davidson upgraded Broadcom to buy from neutral on Friday and raised its price target to $400 from $350, according to market reports. The firm's case rests on Anthropic, the AI developer, which it expects to proceed with a public listing and raise more money, followed by a possible OpenAI listing next year. It sees Anthropic potentially becoming Broadcom's biggest chip-design customer next year and believes "investors underestimate the odds" of those events. The stock fell anyway, a sign of how much the sector mood outweighed company-specific news.

Financing the Anthropic buildout

Broadcom's ties to Anthropic have become central to its story. In a recently disclosed arrangement described in market analysis, Bank of America (NYSE:BAC), Blackstone (NYSE:BX), Citigroup (NYSE:C) and Morgan Stanley (NYSE:MS) are providing $63 billion to a special purpose vehicle that buys Broadcom AI chips for Anthropic and leases them to the AI lab, with deliveries expected to begin in 2027. The money is not a new order but funds a compute agreement already announced.

Broadcom provides residual value support, meaning it would cover part of the shortfall if Anthropic defaulted. Its maximum potential Liability on this deal is about $43 billion, according to an SEC filing, and about $72 billion across this deal and an earlier one from June. Anthropic can also issue up to $42 billion in convertible notes to Broadcom or a partner to help pay its rent.

What Broadcom does

Broadcom designs semiconductors and sells infrastructure software. On the chip side it is the leading designer of custom AI accelerators, built to order for large customers, and a major supplier of networking chips that connect thousands of processors inside AI data centers. Its software business, built largely through acquisitions including VMware, sells infrastructure and security software to large enterprises.

Results and guidance

Broadcom's most recent report, for its fiscal third quarter ended August 2, showed explosive growth. Revenue rose 86% to $29.59 billion, according to market reports. AI semiconductor revenue jumped 221% to $16.7 billion and rose 54% from the previous quarter. Non-GAAP Earnings were $3.32 a share, and free Cash Flow hit a record $13.7 billion, or 46% of revenue. "Demand for our custom AI accelerators and networking continues to be very strong," chief executive Hock Tan said. The company also declared a quarterly Dividend of $0.65 a share.

For the fiscal fourth quarter, Broadcom guided revenue to about $34.8 billion, up 93% from a year earlier, with AI semiconductor revenue of $21.7 billion. Market Analysis said management sees AI semiconductor revenue roughly doubling to about $115 billion in fiscal 2027.

Valuation

At about 41.6 times trailing earnings, based on market data, Broadcom looks expensive next to Nvidia at about 26 times, though far cheaper than AMD at about 130 times and Marvell at about 65 times. Because earnings are growing so quickly, forward measures look lower: market analysis put Broadcom at about 18 times consensus estimates for fiscal 2027, close to the S&P 500's forward multiple of about 18.7. The stock's record close was $481.57 on June 2, so Friday's price is roughly a third below that peak.

The bull case

Bulls see Broadcom as the main beneficiary as large AI developers design their own chips rather than rely entirely on Nvidia. Revenue nearly doubled last quarter, margins are high, free cash flow is at a record and management is guiding for further acceleration. A successful Anthropic listing, as DA Davidson anticipates, could strengthen the finances of what may become Broadcom's largest customer and reduce worries about the backstop.

The bear case

Bears worry about concentration. A growing share of Broadcom's AI Business depends on a handful of customers, and Anthropic in particular. The residual value guarantees mean that trouble at Anthropic could hurt Broadcom's revenue and Balance Sheet at the same time, and market analysis questioned whether management's description of the support as modest fits the size of the caps. More broadly, if hyperscalers and AI labs slow spending because returns are taking too long, Broadcom's growth forecasts would be exposed.

Anthropic Listing and December Report

Near-term catalysts include progress on Anthropic's planned listing, which market reports said could begin trading as soon as mid-November. Broadcom's fiscal fourth-quarter report, typically released in December, will test the $21.7 billion AI revenue target and may update the fiscal 2027 outlook. Investors will also track capital spending commentary from the big cloud providers, which sets the tone for the entire AI chip group.