Broadcom shares dip after earnings beat but revenue forecast falls short of estimates
Broadcom's quarterly earnings surpassed analysts' expectations, yet its revenue outlook missed consensus, leading to a modest decline in the stock.
Broadcom Ltd. saw its shares pull back after an initial drop of up to 4% in after-hours trading on Wednesday, despite reporting fiscal third-quarter earnings that exceeded Wall Street forecasts. The company posted adjusted earnings of $3.32 per share, above the expected $3.23, and revenue of $29.6 billion, up 86% year over year and slightly ahead of the $29.45 billion consensus.
AI semiconductor sales surged, with third-quarter AI chip revenue reaching $16.7 billion, a 221% increase from a year earlier and a 54% rise from the prior quarter. However, Broadcom projected current-quarter revenue of $34.8 billion, below the $35.05 billion analysts had anticipated.
"I can understand the selling pressure," said Cody Acree, an equity research analyst at StoneX, who maintains a Buy rating on the stock. He added that the magnitude of the beat was insufficient given Broadcom's heavy exposure to AI.
"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," Acree explained.
Company CEO Hock Tan highlighted continued strong demand for its custom AI accelerators and networking products. Acree noted that Broadcom remains a close competitor to Nvidia in the data-center ecosystem, suggesting investors consider timing for entry and trade management.
Broadcom's stock is up about 6% year-to-date, trailing Nvidia's roughly 20% gain over the same period.