Third Point Starts to Raise Alarm Bells on Broadcom After Dumping AVGO Stock in Q2

Broadcom, a global technology leader headquartered in California, designs and supplies a wide range of semiconductor and infrastructure software solutions, becoming a key enabler of the AI boom through custom AI accelerators, high-speed networking chips, and broadband products. The company's stock has climbed 26% year-over-year, trading around $380, but remains far above its 52-week low of $281.87.

Institutional buying continues, with analysts maintaining strong buy ratings and an average price target of $519.35, indicating a potential 43% upside.

However, Third Point, a prominent hedge fund led by Dan Loeb, has recently exited its full 50,000-share position in Broadcom during Q2, sparking concerns about the stock's valuation. The move aligns with a broader trend of semiconductor-sector exits, including reduced positions in KLA and Lam Research, and the departure from Nvidia. Third Point has since redirected capital to other opportunities like Applied Digital, Core Scientific, and Wolfspeed, as well as initiated a position in SpaceX.

Despite Third Point's exit, consensus among analysts remains overwhelmingly positive, with 41 rating Broadcom as a Strong Buy, led by an average price target of $519.35. Broadcom's fiscal second-quarter 2026 revenue reached $22.1 billion, up 48% year-over-year, driven by explosive AI semiconductor demand, while non-GAAP diluted EPS grew to $2.44, exceeding expectations.

AI semiconductor revenue surged 143% YoY to $10.8 billion, and adjusted EBITDA hit a record $15.2 billion, accounting for 69% of total revenue. Management expects third-quarter revenue to grow by 84% to approximately $29.4 billion, with AI semiconductor revenue alone projected to exceed $16 billion, underscoring confidence in sustained hyperscaler demand.