Broadcom shares dipped in late trading despite reporting an 86% quarterly revenue surge to $29.6 billion, driven by booming artificial intelligence demand. Analysts note the beat failed to satisfy lofty investor expectations, as the chipmaker’s near-term guidance landed slightly below Wall Street consensus forecasts.
The company reported revenue of $29.6 billion for the July quarter, climbing 86% from the previous year and outpacing the $29.45 billion anticipated by analysts, according to data outlined by Yahoo Finance. MarketWatch noted that the $29.6 billion revenue for the July quarter was up 86% from the previous year and above the $9.2 billion that analysts tracked by FactSet had been anticipating. Adjusted earnings per share reached $3.32, topping expectations of $3.23, while MarketWatch reported adjusted earnings of $3.32 per share came in ahead of analyst estimates for $3.22. Yet the market reaction was immediate and punishing; the stock sank immediately after the results, tumbling as much as 4% in after-hours trading on Wednesday before trimming losses to trade down 2.44 (-0.66%) at $367.24 at close on September 2 at 4:00:01 p.m. EDT.
Wall Street Reconsiders Broadcom Growth Magnitude
Cody Acree, StoneX financial equity research analyst, explained the downward pressure in after-hours trading, telling Yahoo Finance: I can understand the selling pressure.
Cody Acree, StoneX financial equity research analyst
“The magnitude is not quite enough from a top and bottom line standpoint on the beat and raise when you have a company that is this levered to AI,” said Acree.
Semiconductor and Networking Revenue Surge
The core engine driving Broadcom remains its data center hardware and custom silicon, as the AI chip and networking giant sees revenue growth amid booming AI demand. Third-quarter AI semiconductor revenue hit $16.7 billion, demonstrating a staggering 221% increase year over year and a 54% jump quarter over quarter.
CEO Hock Tan pointed directly to robust underlying enterprise demand in the earnings release as tech giants race to make custom silicon and build out data centers. Demand for our custom AI accelerators and networking continues to be very strong,
CEO Hock Tan said in the company’s earnings release.
This performance solidifies Broadcom’s standing as a key player in the sector, with the stock up 6% year-to-date versus peer Nvidia’s (NVDA) 20%. Acree noted that Broadcom is really just second only to Nvidia as far as its ecosystem across the data center, adding: It's just a matter of when do you enter and when do you trade around a position.
Forward Guidance Falls Short of Loftiest Consensus
Investor caution was further compounded by forward-looking projections for the current fiscal period. Broadcom said it expects revenue of $34.8 billion for its current quarter.
That forecast came in below the $35.05 billion consensus expected by analysts, according to Bloomberg data, leaving a razor-thin margin of disappointment that magnified the after-hours sell-off.
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