Broadcom Inc (NASDAQ:AVGO, XETRA:1YD) shares fell more than 6% after the company's fiscal fourth-quarter revenue guidance fell short of Wall Street expectations, overshadowing a third-quarter earnings beat driven by surging demand for its custom AI chips.
The company guided to fourth-quarter revenue of approximately $34.8 billion, below the $35.03 billion analysts had projected, sending shares lower despite otherwise strong results.
Broadcom posted third-quarter revenue of $29.6 billion, up 86% year-over-year and ahead of the $29.36 billion analysts had expected. Adjusted earnings per share came in at $3.32, above estimates of $3.24 and up 96% from a year earlier.
AI semiconductor revenue reached $16.7 billion, a 221% jump from the prior year. Non-GAAP operating income totaled $20.1 billion, up 92% year-over-year and above the $19.73 billion estimate.
For the fourth quarter, the company expects non-GAAP operating income to be around 66% of projected revenue, with AI semiconductor revenue forecast at $21.7 billion.
By segment, Semiconductor Solutions generated net revenue of $20.8 billion, up 127% year-over-year, while Infrastructure Software brought in $8.8 billion, up 29%.
"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," said Hock Tan, CEO of Broadcom.
Free cash flow for the quarter was $13.7 billion, up 95% year-over-year and roughly in line with the $13.76 billion estimate. Cash flow from operations rose 98% to $14.2 billion.