Hey there, bargain hunter.

Broadcom reported a good quarter. Revenue of $22.19 billion, up 48% year-over-year. Adjusted EPS of $2.44 against a $2.40 estimate. Clean beat. And the stock dropped more than 12% in premarket trading.

That is the part worth sitting with for a second.

CEO Hock Tan held the company’s long-range AI chip revenue forecast at $100 billion for fiscal 2027. That target has not moved since it was first introduced in March 2026. Not a dollar higher. Meanwhile, global technology firms are expected to collectively spend at least $630 billion on AI infrastructure this year alone. Investors came into this report expecting the number to move. It did not. That gap between expectation and delivery is what triggered the selling, not the results themselves.

What’s interesting is how quickly the math has changed. Twelve months ago, beating quarterly revenue was the whole game. Now it is table stakes. The market is pricing trajectory, not output. Long-range AI guidance revisions are the thing hyper-growth investors are actually watching, and when a major chip company holds that number flat, the read across the sector is immediate.

Slight tangent, but it matters here: Broadcom also guided Q3 AI semiconductor revenue to $16 billion, a year-over-year increase of over 200%. Sounds strong. But the consensus estimate was closer to $17.2 billion. That 7% miss on top of the unchanged long-term target was enough to confirm what investors already suspected. The ceiling on near-term upside is lower than the market was positioned for.

SMCI is where this gets messy.

Super Micro Computer does not make chips. It assembles AI servers. The company has no direct exposure to Broadcom’s guidance math. But during a sector-wide liquidation, that distinction gets ignored. SMCI shares fell in premarket trading Thursday, pulled down alongside everything else in the AI hardware ecosystem.

Here’s where I’m at on the fundamentals: the revenue growth is real. FY2025 came in at $21.97 billion, up nearly 47% year-over-year. Management has guided FY2026 to at least $38.9 billion, implying roughly 82% growth. AI GPU platforms accounted for over 80% of revenue in the most recent quarter. The backlog extends well into 2027. None of that has changed this week.

What has not changed either: FY2025 earnings fell 9% to $1.05 billion despite the revenue surge. Gross margins are under consistent pressure. The company is still navigating an active DOJ export-control investigation involving former employees, multiple securities fraud lawsuits tied to alleged illegal server exports to China, and adverse audit opinions on internal controls for both FY2024 and FY2025. Analyst consensus sits at Hold across 18 analysts, with the average 12-month price target implying downside from where shares are trading now.

The part people skip: SMCI’s growth story is not in question. The market is not selling this name because the AI server demand cycle is broken. It is selling because the entire sector just got repriced on a guidance signal from its most important chip supplier, and SMCI does not have the margin structure or the clean compliance record to hold up as a premium name in that kind of environment.

Premarket weakness can look like an opportunity. Sometimes it is. But the guidance bar across this sector just got raised, and SMCI needs a few specific things to change before that changes – resolved legal exposure, a gross margin recovery, and a cleaner audit history. None of those are imminent.

Numbers worth keeping:

• AVGO Q2 FY2026 revenue: $22.19B (+48% YoY)
• AVGO adjusted EPS: $2.44 vs. $2.40 estimate
• AVGO long-term AI chip target: $100B for FY2027 – unchanged since March 2026
• AVGO Q3 AI revenue guide: $16B vs. ~$17.2B consensus
• SMCI FY2025 revenue: $21.97B (+47% YoY)
• SMCI FY2025 earnings: $1.05B (-9% YoY)
• SMCI FY2026 revenue guidance: $38.9B minimum
• SMCI AI GPU platform share: over 80% of quarterly revenue
• DOJ investigation: active, former employees named
• Analyst consensus on SMCI: Hold – avg. target implies downside

The next thing to watch is whether Broadcom revises that $100 billion target upward on the next call. If it does, this whole conversation looks different. If it does not, the pressure on AI hardware names continues regardless of what their own revenue lines say.