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Thursday, September 3, 2026 |
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The Last Page.
The last page, first.
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Broadcom cleared $16 billion. The stock fell anyway.
One Wall Street analyst just raised his target to $580, the highest on record. Another says last night’s beat was not enough to justify it.
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The story
Broadcom reported last night, and the number this letter flagged came in clean. AI chip revenue hit $16.7 billion, up 221% from a year ago. Fifty-four percent growth in a single quarter.
That clears the $16 billion bar this letter set yesterday, the number that was supposed to decide everything.
Wall Street split hard on what to do next. JPMorgan’s Harlan Sur raised his target to $580, the highest on the Street. He points to Broadcom’s five-year Google chip deal, locked in through 2031.
StoneX’s Cody Acree called the same report thin for a stock this levered to AI.
Sur says the dip is the entry point. Acree says the entry point already passed.
The reason for the drop sits in one number. Broadcom guided next quarter’s revenue to $34.8 billion, a hair under Wall Street’s $35 billion estimate. If you hold an index fund, you already own this seesaw.
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$10.8B
AI chip revenue two quarters back, before this bet started.
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$16.7B
What Broadcom delivered last night, up 221% in a year.
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$21.7B
What it guided to next, up 236%. The pace is not slowing.
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Best case
SEPTEMBER 17, 2026. The stock has clawed back nearly all of last week’s drop. JPMorgan’s $580 target is the number everyone quotes again.
The five-year Google contract Sur flagged locks in TPU orders through 2031. Broadcom itself guided AI revenue to roughly double next year, to $115 billion, then double again after that, to $230 billion. Anthropic and OpenAI keep ramping toward the gigawatt-scale deployments behind that guide.
If you hold an S&P 500 fund, the seesaw evens out and you barely notice it happened. Erste Group’s downgrade from two weeks back. Still early, not wrong.
The 10-year Treasury eases off 4.80%, and every high-multiple grower Broadcom sits next to catches the same relief.
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Worst case
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SEPTEMBER 17, 2026. The stock is still below where it closed the day before earnings. The $350 support level broke last week.
UBS’s Timothy Arcuri, the only analyst who cut his target. He looks early now, not wrong.
Marvell’s own Google chip win keeps coming up on every bear’s call, a reminder Broadcom does not own the relationship outright. The 10-year Treasury holds above 4.80%, and growth stocks priced for perfection keep paying the rate tax first.
If you hold an S&P 500 fund, you feel this too, just spread thin enough that the statement does not scream. Wall Street’s own targets no longer agree with each other. That kind of split has not resolved kindly for late buyers before.
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How it ends
You get Wall Street treating last night’s drop as the entry point unless Broadcom’s stock breaks $350 and stays there.
Broadcom did not miss on AI. It beat the number this letter set, by more than half a billion dollars. It guided the next one up again, not down. More than ten analysts raised their targets within hours, and JPMorgan’s Harlan Sur went to $580, the highest on the Street.
The sell-off traces to one softer line. Total revenue guidance landed about $250 million under Wall Street’s own estimate. The stock had already run 24% in a month, and that was enough.
If you hold an S&P 500 fund, you already own the seesaw and you will own whatever comes next too. The math still favors Sur’s camp. A company guiding to $230 billion in AI revenue by 2028 does not usually keep falling over one quarter’s rounding error.
Nvidia’s dip reversed inside the same earnings call last week. Broadcom’s has not, not yet. That gap is the trade everyone is actually watching now.
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The hinge is whether Broadcom’s stock holds $350 in the sessions ahead, the level Wall Street is now calling support. A close back above $367, last week’s pre-earnings level, hands the argument to Sur. A close below $350 hands it to Acree and Arcuri.
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Case closed: Broadcom’s $16 billion number
The promise. This letter, yesterday: “You get Broadcom clearing its own $16 billion number unless the guidance for next quarter comes in soft.”
The ending. Broadcom’s AI chip revenue hit $16.7 billion, up 221% from a year ago, clearing the bar by half a billion dollars. The guidance for next quarter did not come in soft. It came in at $21.7 billion, up 236%, the fastest growth rate of the year. Wall Street sold the stock anyway, on a total revenue guide that landed about $250 million under its own estimate.
Cleared the bar. Sold anyway. |
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