Chip ETFs to Buy as Broadcom Sinks Over 10% Despite Q2 Earnings Beat

Shares of Broadcom Inc. AVGO plunged nearly 13% on June 4, 2026, despite the company announcing upbeat second-quarter fiscal 2026 results. The tech giant’s infrastructure software revenues totaled $7.18 billion and grew 9% year over year, but fell short of analysts’ expectations of $7.32 billion (as cited in CNBC). This shortfall may have weighed on investor sentiment and was reflected in the chipmaker’s decline in the latest trading session.This may encourage investors seeking exposure to AVGO to consider buying on the dip, particularly as the company's AI semiconductor revenues are expected to exceed $100 billion in fiscal 2027.However, single-stock investing inherently exposes your portfolio to concentrated corporate vulnerabilities. In the case of AVGO, the explosive growth of its custom AI application-specific integrated circuit (ASIC) business comes with a distinct catch: lower profit margins. Notably, the company’s fiscal second-quarter gross margin suffered a loss of 230 basis points year over year, primarily owing to its semiconductor business.  This margin pressure, compounded by slowing growth in the highly profitable infrastructure software segment that missed Wall Street expectations, threatens the cash-generating engine that supports Broadcom’s capital-intensive AI strategy.For investors looking to capitalize on AVGO’s better-than-expected revenue growth from its AI business without being fully exposed to the company-specific challenges, a more prudent strategy would be to invest in semiconductor exchange-traded funds (ETFs) with significant exposure to this chipmaker.  This approach should help mitigate risks from customer concentration, such as Broadcom's reliance on a handful of hyperscale clients, or geopolitical factors like recent government scrutiny of its customer Anthropic.But before diving straight into these ETFs, let us review AVGO’s overall performance in the fiscal second quarter.A Brief Analysis of AVGO’s Q2 ResultsBroadcom’s second-quarter fiscal 2026 adjusted earnings per share surpassed the Zacks Consensus Estimate by 1.7%, while its revenues beat the consensus mark by a whisker.Its AI revenues more than doubled on a year-over-year basis. AVGO ended the fiscal second quarter with an inventory of $3.4 billion as it continued to secure components to support strong AI demand. Its Semiconductor Solutions segment registered record revenues worth $15 billion, which reflected a 79% year-on-year growth driven by AI. AVGO expects to generate infrastructure software revenues of approximately $8.9 billion in the fiscal third quarter, suggesting an improvement of 31% year over year. The company expects its AI revenues to triple in the fiscal third quarter to $16 billion, falling short of Wall Street’s consensus forecast of approximately $17.2 billion. However, AVGO expects its quarterly gross margin to shrink to 74%.As Broadcom seeks to deliver high-performance compute capacity at the lowest possible cost and power consumption for leading AI frontier labs, including Anthropic and OpenAI, it is developing the AI XPV platform with Apollo, Blackstone and other major investors with the aim to deploy more than 20 gigawatts of compute capacity by 2028.Broadcom-Heavy ETFs to BuyInvesco PHLX Semiconductor ETF SOXQ This fund, with a market value worth $2.63 billion, offers exposure to the 31 largest U.S.-listed securities of companies engaged in the semiconductor business. Of these, AVGO holds the fourth spot, with a 7.76% share of the fund.SOXQ has surged 92.3% year to date. The fund charges 19 basis points (bps) as fees and sports a Zacks ETF Rank #1 (Strong Buy). It traded at a good volume of 4.79 million shares in the last trading session. VanEck Semiconductor ETF SMH This fund, with net assets worth $71.71 billion, provides exposure to 26 companies involved in semiconductor production and equipment. Of these, AVGO holds the sixth spot, with a 6.44% share of the fund.SMH has soared 74.3% year to date. The fund charges 35 bps as fees and sports a Zacks ETF Rank #1. It traded at a good volume of 10.40 million shares in the last trading session. iShares Semiconductor ETF SOXX This fund, with net assets worth $40.47 billion, offers exposure to 30 U.S. companies that design, manufacture, and distribute semiconductors. Of these, AVGO holds the fourth spot, with a 6.11% share of the fund.SOXX has skyrocketed 100.1% year to date. The fund charges 34 bps as fees and sports a Zacks ETF Rank #1.  It traded at a good volume of 11.41 million shares in the last trading session. First Trust NASDAQ Semiconductor ETF FTXLThis fund, with net assets worth $2.66 billion, provides exposure to 34 U.S. semiconductor companies. Of these, AVGO holds the fifth spot, with a 5.94% share of the fund.FTXL has skyrocketed 110.8% year to date. The fund charges 60 bps as fees and sports a Zacks ETF Rank 1. It traded at a volume of 0.21 million shares in the last trading session. Boost Your Portfolio with Our Top ETF InsightsZacks' exclusive Fund Newsletter delivers actionable information, top news and analysis, as well as top-performing ETFs, straight to your inbox every week.Don’t miss out on this valuable resource. It’s free!Get it now >>This article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks