Broadcom reported Q2 FY2026 after the close yesterday. The numbers were good -- EPS beat, record semiconductor revenue, record free cash flow, and Q3 guidance well above consensus. But the stock is getting destroyed because Broadcom held its $100B FY2027 AI revenue forecast instead of raising it. After a 55% rally this quarter, the market wanted perfection.
Q3 AI chip sales guided to $16B -- slightly below some elevated estimates, but that is still a 3x jump year-over-year. AI semiconductor revenue represented 49% of total revenue. Infrastructure Software grew 9% YoY to $7.2B with 79% operating margin.
The $100B FY2027 AI target is likely a sandbag. Management expects to ship capacity for 10 gigawatts of compute in 2027. Chip sales to Anthropic and OpenAI are poised to ramp in 2027-2028, making FY2026 the relatively softer year (at still ~200% growth).
A $315B+ market cap wipeout on an earnings beat with blowout guidance is the kind of overreaction worth watching. If you believe the AI capex cycle is intact -- and everything Broadcom reported says it is -- this could be a gift at $415-420.
AVGO is dragging the entire semiconductor complex lower. Pre-market damage across the sector:
MU, AMD, QCOM also down 4-7% pre-market. SMCI -7.5%. This is a broad risk-off move in AI/semis. ASML is the outlier -- JPMorgan boosted its target to $2,200 from $1,813 yesterday, and it held up.
Apple's WWDC kicks off Monday, June 8 at 10 AM PT. The main event: Siri 2.0 -- a complete overhaul with a dedicated chatbot app, chat interface in Dynamic Island, and agent capabilities to compete with ChatGPT and Claude. iOS 27, macOS 27, and the rest of the lineup will be unveiled.
BofA raised its price target to $380 from $330, arguing that the company owning the device and platform where AI agents run becomes more valuable than the model behind the agents. "All Systems Glow" tagline hints at the AI-first direction.
225K vs 212K expected. Weekly initial claims surprised to the upside. This is the last economic data point before Friday's nonfarm payrolls (the big one). A softening labor market reading heading into payrolls could shift the Fed narrative -- watch for rate-cut expectations to firm up. The S&P 500's nine-session winning streak ended yesterday.
SpaceX filed for its IPO last night: 555.6M shares at $135 each, raising ~$75B -- the largest IPO in history. Target valuation ~$1.77T. Ticker: SPCX. Nasdaq debut expected June 12. This will be the capital markets event of the summer and could absorb significant fund flows.
After close today (June 4): Lululemon (LULU), Argan (AGX), Planet Labs (PL).
Before open today: Five Below (FIVE -- already down 11% pre-market), Veeva Systems (VEEV -- down 5% pre-market).
Friday June 6: Nonfarm Payrolls. No major watchlist earnings.
Next week: WWDC Monday June 8. SpaceX IPO Thursday June 12.
No watchlist names report earnings in the next 3 days.