Broadcom (NASDAQ: AVGO), the chipmaker behind custom AI processors and networking silicon, fell sharply in after-hours trading on Wednesday after its fourth-quarter revenue guidance missed Wall Street’s forecast, overshadowing a strong third-quarter beat and a raised multi-year AI outlook.
Broadcom shares had closed Wednesday’s regular session at $367.24, down 0.66%, before the results landed after the bell. Bloomberg and Investing.com reported the stock fell as much as 7% in after-hours dealing, later trimming losses to a decline of roughly 4% to 6%. The stock remains down about 23% from its June peak, though still up around 6% this year.
Broadcom’s third-quarter revenue rose 86% year-on-year to $29.591bn, ahead of the roughly $29.45bn analysts had expected, while non-GAAP earnings per share of $3.32 beat the consensus estimate of about $3.22. AI semiconductor revenue jumped 221% year-on-year to $16.7bn. Management raised full-year AI chip revenue guidance to $58bn from a prior $56bn, and for the first time set multi-year targets of $115bn in fiscal 2027 and $230bn in fiscal 2028.
The disappointment centred on fourth-quarter revenue guidance of roughly $34.8bn, below the average analyst estimate of about $35.05bn. Guidance for AI chip revenue specifically, at $21.7bn, actually came in slightly above the $21.33bn analysts expected, suggesting the shortfall lay in Broadcom’s broader business rather than its AI franchise. The gap comes as Marvell Technology’s new custom-chip agreement with Google intensifies competition in Broadcom’s custom-silicon business, at a time when AI-chip growth expectations across the sector remain extremely high.
“I can understand the selling pressure,” said Cody Acree, equity research analyst at StoneX Financial, who rates the stock a Buy. “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.”
Broadcom’s board also approved a quarterly dividend of $0.65 per share, payable 30 September to holders of record as of 21 September, alongside record free cash flow of $13.7bn, or 46% of quarterly revenue.