Broadcom Beats Q3 Estimates as AI Revenue Jumps 221%, Shares Slide on Soft Guidance

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Broadcom Inc. (NASDAQ:AVGO) reported its fiscal third-quarter results after the bell on Wednesday, and the numbers were strong, but the market wasn't entirely impressed. Let's break down what happened.

Broadcom Q3 Highlights

The semiconductor giant posted revenue of $29.59 billion for the quarter, edging past analyst expectations of $29.36 billion. Adjusted earnings came in at $3.32 per share, also beating the consensus estimate of $3.24 per share, according to market data.

Revenue jumped 86% year-over-year, and the company generated about $14.2 billion in cash from operations and $13.7 billion in free cash flow during the quarter. Broadcom ended the period with roughly $24 billion in cash and cash equivalents.

CEO Hock Tan highlighted the relentless demand for AI infrastructure: "Demand for our custom AI accelerators and networking continues to be very strong. Q3 AI semiconductor revenue of $16.7 billion grew 221% year-over-year, and 54% quarter-over-quarter."

What's Next For Broadcom?

Looking ahead, Broadcom guided for fourth-quarter revenue of approximately $34.8 billion, which came in slightly below the $35.03 billion analysts were expecting. That soft guidance appears to be weighing on shares in after-hours trading.

Tan remained upbeat about the momentum, saying, "In Q4 the momentum continues, and we expect AI semiconductor revenue to accelerate to $21.7 billion, up 236% year-over-year."

The board also approved a quarterly cash dividend of 65 cents per share, payable on Sept. 30 to shareholders of record as of Sept. 21.

Management will discuss the quarter on an earnings call at 5 p.m. ET.

AVGO Shares Move Lower

Despite the beat, Broadcom shares were down 5.07% in after-hours trading, sitting at $348.62 at the time of publication on Wednesday, according to market data.

Investors seem to be focusing on the guidance miss rather than the strong current-quarter performance. It's a classic case of "good news, but not good enough" in a market that's been pricing in explosive AI growth.

For context, Broadcom's custom AI accelerators and networking are key components in the data center build-outs of major cloud providers, making its results a bellwether for the AI trade. The 221% year-over-year surge in AI revenue is impressive, but the market's reaction suggests expectations are even higher.

As always, the earnings call will provide more color on the sustainability of this growth and the company's ability to meet the accelerating demand.

Stock Market News

Broadcom Beats Q3 Estimates as AI Revenue Jumps 221%, Shares Slide on Soft Guidance

Get Broadcom Alerts

Broadcom Q3 Highlights

What's Next For Broadcom?

AVGO Shares Move Lower

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