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Broadcom Beats Third-Quarter Estimates on Strong AI Chip Sales

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Broadcom Beats Third-Quarter Estimates on Strong AI Chip Sales

Broadcom's (AVGO) fiscal third-quarter results topped Wall Street estimates, driven by a surge in artificial intelligence semiconductor revenue, while the chipmaker guided current-quarter sales ahead of market expectations.

Adjusted earnings rose to $3.32 a share during the quarter through Aug. 2 from $1.69 a year earlier, coming in ahead of the FactSet-polled consensus indicating $3.22. Revenue advanced 86% to $29.59 billion, above the Street's $29.24 billion view.

AI semiconductor revenue soared 221% year-on-year to $16.7 billion, driven by strong demand for custom AI accelerators and networking, Broadcom Chief Executive Hock Tan said in a statement.

The semiconductor solutions division's sales climbed 127% to $20.84 billion, while the infrastructure software segment increased 29% to $8.75 billion.

For the fourth quarter, Broadcom anticipates total revenue growth of 93%, to about $34.8 billion, compared with the consensus estimate of $34.68 billion.

AI semiconductor revenue is seen climbing 236% year-over-year to $21.7 billion in the fourth quarter, Tan said.

Broadcom's stock fell 3.4% in after-hours trading, and had gained 6.1% this year through Wednesday's close.

RBC Capital Markets expected the company to report solid quarterly results and raise its fiscal 2027 AI revenue guidance toward the $120 billion consensus view from its most recent guidance of more than $100 billion.

"Overall, we won't be surprised if the stock reacts slightly positively given the recent underperformance but are unsure if (fiscal 2027) estimates will move materially above consensus," the brokerage said in a note to clients last week.

Nvidia (NVDA) said late last month that record data center sales drove a fiscal second-quarter beat. Chip designer Marvell Technology's (MRVL) latest quarterly results also beat market estimates amid a surge in data center revenue.

Previously, chipmaker Advanced Micro Devices (AMD) posted fiscal second-quarter results above estimates and issued a strong third-quarter revenue outlook.

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