Broadcom topped Wall Street's estimates for its fiscal third quarter, but a softer-than-expected revenue forecast for the current period sent shares down 5%, while shares also edged up 2% in extended trading. The chipmaker pointed to growing business with AI labs including Google, Meta, OpenAI and Anthropic, plus expanded spending from Apple, to back a two-year revenue target.
Broadcom's stock dropped 5% as a disappointing fourth-quarter revenue forecast overshadowed a fiscal third-quarter earnings beat. Shares also edged up 2% in extended trading after the chipmaker issued an upbeat longer-term forecast and pointed to growing business with artificial intelligence labs.
Earnings beat, guidance disappoints
The company reported adjusted earnings of $3.32 a share on revenue of $29.59 billion, against analyst estimates of $3.24 a share and $29.36 billion, according to LSEG. But for the fiscal fourth quarter, Broadcom guided to revenue of $34.8 billion, short of the $35.03 billion analysts expected.
Quarterly revenue rose 86% from $15.95 billion a year earlier, while net income more than tripled to $13.09 billion, or $2.68 a share, from $4.14 billion, or 85 cents a share, a year ago. Semiconductor revenue more than tripled to $16.7 billion, beating the $15.2 billion average estimate tracked by StreetAccount, while infrastructure software brought in $8.75 billion, just below the $8.82 billion consensus.
AI customers drive the outlook
Broadcom has become one of the AI boom's biggest winners, designing custom chips for Google, Meta and OpenAI. The stock has jumped more than sixfold since the end of 2022, pushing its market cap to about $1.8 trillion, though shares had gained about 6% in 2026 versus a 12% rise for the S&P 500.
CEO Hock Tan said Broadcom expects to speed up shipments of Google's Ironwood tensor processing units to Anthropic and TPU 8i chips to Google, delivering tens of billions of dollars of processors to Google each year for the next several years. Broadcom is looking for Anthropic to deploy 5 gigawatts of TPU 8i chips in 2027, with line of sight to another 10 gigawatts. Tan also pointed to a 1.3 gigawatt deployment of its Jalapeno chip in 2027, with line of sight to over 5 gigawatts for Jalapeno and its second generation.
Doubling AI revenue by 2028
For fiscal 2027, Tan said Broadcom is looking to double AI revenue to $115 billion, with plans to double again to $230 billion in fiscal 2028. The company is targeting more than $30 in earnings per share, well above the $25.86 LSEG consensus for fiscal 2028 adjusted earnings.
Finance chief Amie Thuener said the company may offer residual value guarantees to AI labs as contingent liabilities. According to CNBC: "It makes economic sense for Broadcom to invest and enable these guys," Tan said.
Source: CNBC
Trading involves risk.
Risk Disclaimer
