--- title: "\"The Wall of AI Fear\" blocks the way, will Broadcom's earnings report tonight still lead to a decline?" type: "News" locale: "zh-CN" url: "https://longbridge.com/zh-CN/news/277783334.md" description: "Broadcom will announce its earnings report on Thursday morning. Despite expectations of strong profit performance, the stock price may continue to be sluggish due to investor concerns about the sustainability of investments in artificial intelligence research and development. Broadcom's stock price has fallen 24% from its peak in December last year, and analysts expect earnings per share to grow by 27% in the first fiscal quarter, with revenue increasing by 29%. However, the market's expectations for future orders are below expectations, which may affect stock performance" datetime: "2026-03-04T13:04:21.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/277783334.md) - [en](https://longbridge.com/en/news/277783334.md) - [zh-HK](https://longbridge.com/zh-HK/news/277783334.md) --- > 支持的语言: [English](https://longbridge.com/en/news/277783334.md) | [繁體中文](https://longbridge.com/zh-HK/news/277783334.md) # "The Wall of AI Fear" blocks the way, will Broadcom's earnings report tonight still lead to a decline? According to Zhitong Finance APP, Broadcom (AVGO.US) will announce its latest quarterly results on Thursday morning Beijing time. Wall Street expects the company to report strong earnings, but based on recent trading patterns, even exceeding this high standard may not be enough to reverse the stock's prolonged slump over the past few months. The chip manufacturer's stock price has fallen 24% from its all-time high set last December, significantly underperforming the S&P 500 index. This sell-off is part of a broader trend where investors are offloading shares of large tech companies due to concerns about the sustainability of hundreds of billions of dollars in artificial intelligence R&D investments. Broadcom is the seventh-largest company in the S&P 500 by market capitalization, valued at $1.5 trillion, and it is a chip manufacturing partner for Alphabet (GOOGL.US) and other AI giants, thus benefiting from these massive investments. ![2389d02d8aa25630a1513a56709bcc22.png](https://imageproxy.pbkrs.com/https://img.zhitongcaijing.com/image/20260304/1772628795868712.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg) Despite these concerns potentially materializing in the future, Broadcom currently appears to be in a solid position. Analysts expect the company's adjusted earnings per share for the first fiscal quarter to grow 27% year-over-year to $2.03, with revenue increasing 29% to approximately $19.3 billion, of which AI-related sales are expected to nearly double to about $8.2 billion. If the company also provides an encouraging earnings outlook, Wall Street professionals would not be surprised. Paul Meeks, head of technology research at Freedom Capital Markets, stated, "Broadcom will certainly make a lot of statements, but they may be irrelevant." Looking back at the stock price movement of Nvidia (NVDA.US) after it released its earnings report last week. The chip giant exceeded Wall Street expectations and raised its earnings guidance due to strong demand for its products and plans for large capital expenditures by hyperscale data center operators. However, in the following two trading days, Nvidia's stock price plummeted 9.4%, marking the largest two-day decline since April. Broadcom's stock price fell sharply after its earnings report last December, dropping more than 11%, marking its worst performance in nearly a year. The issue is that the backlog of AI product orders over the next six quarters is as high as $73 billion, far below expectations. Investors naturally want to know the latest developments regarding order status and the progress of the tensor processing unit (TPU) chips produced for Google. Google's orders are expected to see significant growth in the second half of this year. Collaboration with OpenAI is also expected to drive Broadcom's business expansion by 2027. ## Breakthrough Point: "Deep Moat" Shaon Baqui, senior technology research analyst at Janus Henderson, stated, "It is crucial for them to emphasize their true expertise in designing large custom chips, as they have seven generations of TPU success with Google. This generational capability is very important, especially in the context of competing with Nvidia." The company holds shares in Broadcom He added, "Manufacturing these giant artificial intelligence accelerator chips is really difficult. I think Broadcom should emphasize that they have a very strong competitive advantage in this field." Another issue mentioned by Broadcom in its last earnings report was profit margins. CEO Hock Tan stated that sales in the AI business were dragging down profit margins. Broadcom's adjusted gross margin for the first quarter is expected to be around 77%, down from 78% in the previous quarter and 79% in the same period last year. Analysts may question the company's software business, which is expected to account for 42% of its total revenue by 2025. This segment was previously seen as a way to balance the cyclical fluctuations in semiconductor sales, but the recent sell-off in software stocks has put pressure on the stock. Meeks from Freedom Capital said, "It will be interesting to see how they report and how they guide the development of this specific area. They clearly need to directly address questions about how they view this part of the business during the Q&A session, as it was once an important source of diversification for them. Now, in the era of AI, it is seen as a huge burden." The recent sell-off in Broadcom's stock has indeed caused its price to decline. However, there may still be room for further decline. Currently, Broadcom's price-to-earnings ratio is about 27 times, which, although lower than the peak of 42 times in December last year, is still well above its five-year average of 22 times. Additionally, Broadcom's price-to-earnings ratio is also higher than its competitor Nvidia's 21 times. Options traders are betting on significant volatility in the stock price following the earnings report, with an expected price fluctuation of about 7% after the report is released. Analysts point out that three things could boost the stock price: announcing new revenue contributions from significant hyperscale customers, a substantial increase in AI backlog orders during the same period, and positive comments from Tan regarding deals with OpenAI and Anthropic. However, given the recent pessimistic market reaction, even these may not be enough to trigger a rise in Broadcom's stock price. Analysts noted, "It seems that the better the performance, the worse the stock price performs. 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